(Bloomberg) -- Nestle SA’s weak share-price performance in recent years has cast a shadow over Mark Schneider’s time as chief executive officer of the consumer-goods giant.
The Swiss firm’s shares have slid more than 30% since reaching a record in early 2022 to hover near a five-year low on Friday, after the company’s surprise announcement to replace Schneider with its Latin America chief Laurent Freixe.
That leaves gains under his nearly eight-year tenure of 20%, compared with a more than 40% rally for Europe’s Stoxx 600 Index. By contrast, the stock outperformed the benchmark gauge during his predecessor Paul Bulcke’s time.
“We have met investors that were unhappy with the recent share price development and by implication the CEO,” Bernstein analyst Bruno Monteyne said in a note. “About half the share price decline since its peak in 2022 is simply related to higher bond yields and Nestle being at that time the default bond proxy in European staples. The second half of the share price decline is a combination of recent mishaps.”
Nestle, the maker of Nespresso coffee and Purina pet foods, didn’t give a clear reason for replacing Schneider with Freixe from Sept. 1, in its announcement late Thursday. That’s left analysts puzzling over the move, with concerns about the company’s outlook for profitability and uncertainty about how much change an internal hire can bring.
Schneider was previously lauded by investors as the CEO who overhauled Nestle, fending off a 2017 attack from activist investor Third Point. More recently, Monteyne pointed to a botched IT integration, operational issues in water purification, and a failed acquisition.
Over the past couple of years, Nestle has also struggled to win back shoppers after the post-pandemic bout of inflation, repeatedly missing quarterly sales expectations. In July, Nestle trimmed its sales growth outlook for the year to at least 3%, lower than the roughly 4% previously targeted. The stock has dropped about 10% so far in 2024.
“After an increasingly difficult year, it’s not a total surprise to see a CEO change at Nestle,” Jefferies analyst David Hayes wrote in a note.
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