Nestlé Shares Fall as Chocolate Maker Replaces CEO Amid Slowing Sales

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Nestlé SA shares fell in Swiss trading on Friday, following the announcement that the chocolate maker has replaced its Chief Executive Officer (CEO), Mark Schneider, amid slowing sales and a struggling share price.

CEO Replacement and Resignation

Mark Schneider, who has been with Nestlé for eight years, will not only be replaced as CEO but will also be resigning from the board. The veteran company executive Laurent Freixe, who currently heads Nestlé’s Latin American operations, will take over as CEO on September 1.

During Schneider’s tenure, Nestlé focused on high-growth categories such as coffee, pet care, and nutritional health products, according to the company. However, despite these efforts, Nestlé shares have fallen almost 10% this year due to declining sales as consumers become increasingly frugal with their spending.

UBS Analysts’ Perspective

UBS analysts commented on the CEO replacement, stating that it was not surprising given Nestlé’s disappointing operational and share price performances over the past two-and-a-half years. They also noted an unusually high number of negative headlines surrounding the company.

During Schneider’s tenure, Nestlé faced multiple scandals, including an ongoing investigation in France after two children died from eating frozen pizza contaminated with E. coli.

In response to the news, Nestlé shares slipped 1.2% to 88.40 Swiss francs in intraday trading on Friday. However, its American depositary receipts (ADRs), which trade over-the-counter (OTC), saw a 4% increase about 30 minutes after the opening bell.

Conclusion

The replacement of Nestlé’s CEO, Mark Schneider, comes as the company grapples with slowing sales and a declining share price. Schneider’s focus on high-growth categories during his tenure was not enough to offset the impact of frugal consumer spending.

UBS analysts believe that the CEO replacement was necessary given Nestlé’s disappointing operational and share price performances in recent years and the negative headlines surrounding the company. Nestlé will now look to Laurent Freixe, a veteran company executive, to lead the company and navigate its challenges.

As Nestlé moves into this new era, investors will be closely watching to see if the change in leadership can turn the company’s fortunes around and drive growth in sales and share price.

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