Twinkies Maker Plunges After Company Announces CEO Is LeavingBy
Toler was ‘driving force’ of turnaround, UBS analyst says
Bimbo competition also expected to hurt third-quarter results
Hostess Brands Inc., maker of the iconic Twinkie snack cake, plunged to its lowest level in almost a year after announcing that its chief executive officer was stepping down.
Shares of Hostess dropped as much as 14 percent to $11.61 in New York on Friday, the lowest intraday price since shortly after the company went public in November 2016. UBS Group AG downgraded the stock to sell from neutral, which also weighed on the shares.
Hostess announced Thursday that CEO Bill Toler will retire as soon as March. The food industry veteran took the helm in 2014 after Hostess was purchased by Apollo Global Management and C. Dean Metropoulos & Co. for $410 million. He inherited a company that had struggled for years and twice filed for bankruptcy, The new management team brought Twinkies back to store shelves and orchestrated the company’s return to the public markets through a reverse merger.
“We view Toler as the driving force behind Hostess’s turnaround success,” UBS analyst Steven Strycula said in a note to clients. He also cited slowing category trends and market share loss in its Sweet Baked Goods unit.
Growth in the fiscal third quarter “will probably be slow” because of competition from Mexican bakery giant Grupo Bimbo SAB and delayed orders due to the hurricanes in Texas and Florida, according to Farha Aslam, an analyst at Stephens Inc. She said sales growth will pick up in the fourth quarter as the company introduces more differentiated products, particularly in its breakfast offerings.