Reynolds Taps Crew as CEO in Rare Woman-to-Woman SuccessionBy
Company also posts weak earnings, sending shares tumbling
Cameron was serving second stint as head of cigarette maker
Reynolds American Inc.’s Debra Crew, the head of its largest unit, will succeed Susan Cameron as chief executive officer next year, making Reynolds one of the rare companies to have two consecutive female CEOs.
The transfer of power from one woman CEO to another is uncommon among large publicly traded corporations. The first time a company in the Standard & Poor’s 500 Index did so was in 2009, when Ursula Burns took the reins from Anne Mulcahy at Xerox. Yet Xerox had a market capitalization of about $7 billion at the time, a 10th of Reynolds’ current size.
Crew will have a tough task ahead of her as she steers the company through declining tobacco sales and a shift to electronic cigarettes and vaping products. The company also reported profit and sales that trailed analysts’ estimates on Wednesday, sending its shares down the most in more than a year.
Cameron will be named executive chairman on Jan. 1 and serve in the position until May 2017, when she’ll become nonexecutive chairman, Winston-Salem, North Carolina-based Reynolds said Wednesday in a statement. Crew, currently president and chief operating officer of the R.J. Reynolds Tobacco Co. subsidiary, will join the parent company’s board when she becomes CEO.
The succession will bring an end to Cameron’s second tour as Reynolds’ CEO. She first held the role when the company was formed in 2004 and served until 2011. Cameron then came back in 2014 to help revive stagnant sales and led the $25.9 billion acquisition of Lorillard, owner of the Newport menthol cigarette brand.
“Yes, I really am retiring as CEO this time, and I’ve assured my husband there will be no round three,” Cameron said on a conference call with analysts.
Before joining Reynolds as chief commercial officer in 2014, Crew was president of PepsiCo Inc.’s North America Nutrition business. Prior to PepsiCo, Crew worked at Mars Inc., Nestle SA and Kraft Foods Inc. She served in the U.S. Army from 1993 to 1997.
Reynolds also reported third-quarter earnings that trailed analysts’ estimates on Wednesday. Profit was 61 cents per share, excluding some items, the company in a statement. Analysts estimated 64 cents, on average. Sales excluding excise taxes rose 1.4 percent to $3.21 billion, trailing analysts’ $3.31 billion average projection.
The shares fell as much as 8.2 percent to $43.38 in New York, the biggest intraday decline since August 2015. The stock had gained 2.4 percent this year through Tuesday.
Tobacco sales had been helped by lower gas prices and rising wages for more than a year. With the bump from those benefits fading, cigarette sales volume declines are back in the spotlight.
“The return back to the normal declines in the combustible portfolio, we have understood that for a long time,” CEO-elect Crew said in an interview. “Our strategy has been to really look at leadership and our growth through a lot of next generation and smoke-free alternatives for adult tobacco consumers.”
(Previous versions of this story were corrected to fix Crew’s title and the spelling of Anne Mulcahy’s name.)