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Snyder's-Lance CEO retires unexpectedly
CHARLOTTE, N.C. — Shares of snack maker Snyder's-Lance plunged Monday after the company announced that Carl Lee retired unexpectedly as CEO. The Charlotte-based manufacturer also said it has faced "difficult challenges" that have weighed on first-quarter earnings.
The stock closed Monday at $33.76, down more than 15 percent.
Lee, 57, was the CEO of Snyder's of Hanover from 2005 until December 2010, when the Hanover company merged with Charlotte-based Lance. Lee then became the merged company's chief operating officer, and assumed the role of CEO in May 2013.
Brian Driscoll, former CEO of Diamond Foods and a member of Snyder's-Lance's board, has stepped in as interim CEO. The company said in a statement it will launch a national search for a permanent replacement for Lee. Driscoll is a "strong candidate" for the position.
Driscoll was CEO of Diamond Foods until Snyder's-Lance bought the company in early 2016. Snyder's-Lance said late last year it was selling Blue Diamond's nut business to a private equity firm called Blue Road Capital.
The company did not say whether its recent financial performance was the reason for Lee's early retirement.
"With increased focus on margin expansion and profitable growth, we are confident that Brian has the skills to address some of the recent performance challenges as well as drive the company to a level of profitability more in line with the expectations of our shareholders," said James Johnston, the company's chairman.
Alex Pease, the company's chief financial officer, said Snyder's-Lance has faced "difficult challenges" during the first quarter that have negatively impacted earnings. Under Driscoll's leadership, Pease said, the company is moving aggressively to improve earnings.
For the first quarter, Snyder's-Lance expects earnings to be between 11 and 12 cents per diluted share. The company expects net sales in the range of $530 million to $532 million, a rise of approximately 18 percent from continuing operations in the first quarter of 2016. The company said it doesn't plan to release preliminary financial results on an ongoing basis.
"Increased investments in promotional and marketing spending combined with gross margin pressure had an adverse effect on our performance and more than offset the benefits of synergy delivery related to the Diamond Foods transaction," Pease said.
In a research note Monday, William Chappell of Sun Trust said his team does not see the company's lower-than-expected first-quarter results as a reason alone for a forced exit of its CEO. Still, Lee's departure was unexpected, Chappell said.
"We are surprised by the timing of the departure as we spent a fair amount of time with Carl over the last few months, and we had expected that he would stick around for the next few years," Chappell said.
Snyder's, known for Hanover's pretzels and Lance peanut butter sandwich crackers, has been expanding its selection of "better-for-you" offerings with acquisitions such as Diamond. Snyder's-Lance also said late last year it is investing $38 million to expand its Charlotte facilities, where it will add 130 jobs over the next five years.