Campbell Soup Co. president and chief executive Denise Morrison retired effective Friday in an abrupt move less than two months after the Camden-based company completed its biggest acquisition ever, paying $6.1 billion for snack maker Snyder’s-Lance Inc.
It appears that Campbell, which employs about 1,200 people at its headquarters, is back to the drawing board.
Replacing Morrison on an interim basis will be Keith R. McLoughlin, 61, a member of Campbell’s board of directors since 2016. McLoughlin was president and CEO of Electrolux AB, a global manufacturer of major household appliances from 2011 through early 2016.
McLoughlin told analysts during a conference call on yet another disappointing quarterly earnings report that board and management would undertake over the next few months a complete review of Campbell’s businesses, which run from fresh carrots grown in California to chocolate-draped Tim Tam cookies that are popular in Australia.
Despite a deeply troubled recent performance history, Campbell has “products and brands, market positions, margins, and cash flow that would be the envy of many, many companies,” plus a “deep keel” developed over a nearly 150-year history that will enable it to successfully navigate the current turmoil, McLoughlin told investors.
For analysts, the review must address the question, raised Friday by David Palmer, an analyst with RBC Capital Markets, and so far left unsolved by a series of CEOs, of whether Campbell has the “ability to meaningfully drive profitable growth.”
On the New York Stock Exchange, Campbell’s shares closed down $4.85, or 12 percent, to $34.37, their lowest level in more than five years. Friday’s drop left the company’s share price only 4 percent above its close of $33.05 the day before Morrison became CEO in August 2011.
Descendants of John T. Dorrance, the inventor of condensed soup, own 41 percent of Campbell’s shares and are on track to collect $175 million in dividends this year. That family control has long insulated the company from takeover bids.
Morrison’s sudden retirement comes as Campbell, like many major packaged-food companies, has struggled to find a way to increase its sales amid changing consumer tastes, despite the continued strong profitability of the company’s staple canned soups.
Les C. Vinney, chairman of Campbell’s board, praised the job Morrison, 64, did in preparing the company for the future.
“Denise has been a passionate advocate and leader over her 15 years with the company,” Vinney said in a news release. “She has made many important contributions over the past seven years as chief executive officer to reposition Campbell in the rapidly changing food industry.”
Under Morrison, Campbell spent billions buying companies, including Bolthouse Farms for $1.55 billion in 2015, in a bid to get into faster-growing areas of the food industry, but struggled to successfully run the new businesses. Investors were concerned about that track record as Campbell borrowed $6 billion to buy Snyder’s-Lance this year.
The company now has $9.8 billion in debt, up from $3.08 billion when Morrison took over as CEO. During her tenure, sales climbed 2.2 percent, to $7.89 billion from $7.72 billion, as Morrison sold legacy operations, such as its remaining European soup businesses, and bought Bolthouse, Plum Organics baby food, and Garden Fresh Gourmet to spur faster sales growth.
Including revenue from the recently acquired Pacific Foods, an organic soup and broth manufacturer, and Snyder’s-Lance, whose brands include Cape Cod potato chips and Emerald nuts, Campbell’s revenue would have been $10.3 billion in fiscal 2017.
It is far too soon to know if the Snyder’s-Lance acquisition will lead to faster revenue growth, but the centerpiece of Morrison’s effort to diversify Campbell, a unit called Campbell Fresh, has had a string of troubled quarters stretching back to the fall of 2015.
In addition to Bolthouse Farms, which sells fresh carrots, salad dressings, and beverages, the division also includes Garden Fresh Gourmet, which Campbell bought for $231 million in 2015, and a legacy refrigerated soup business.
On Friday, Campbell announced a $619 million write-down on that division, recognizing for the third time since September 2016 that it was not meeting expectations. That brought total impairment charges on the unit to $972 million.
“It didn’t work, and it wasn’t a right fit,” said Mitchell B. Pinheiro, a stock analyst who has followed Campbell for decades. “I give her credit for trying something, but packaged food is a lot different than fresh — different distribution systems, manufacturing, different supply chain issues. That was tough.”
On the conference call with analysts, McLoughlin and the company’s chief financial officer, Anthony DiSilvestro, said they would not speculate about the results of the strategic review, which are to be shared with investors in late August.
“Everything is on the table. There are no sacred cows.” McLoughlin said.