BOULDER – The share price for Boulder Brands Inc. (Nasdaq: BDBD) plunged more than 21 percent in Wednesday morning trading following announcements that CEO Stephen Hughes has resigned and that the company is expecting decreased sales in the second quarter.
Chief operating officer James Leighton has been appointed by the company’s board of directors to serve as interim CEO while the company carries out a national search for a replacement.
The change in leadership comes just three months after Hughes, a cofounder, was replaced as chairman of the board by R. Dean Hollis as the company split the positions of CEO and chairman.
Boulder Brands shares were trading at $7 late Wednesday morning after hitting a 52-week low of $6.82 earlier in the day. The company announced that it expects sales for the second quarter of between $122 million to $124 million, down 5 percent to 7 percent from the same period a year ago. The company said it would update its full-year 2015 outlook when it announces second-quarter earnings.
“The board believes now is the time for new leadership at Boulder Brands,” Hollis said in a press release. “This change, along with the evolving dynamics of our industry, gives us confidence that we are well-positioned to leverage customer and consumer desires for authentic and scalable natural brands to deliver sustainable results and generate meaningful value creation.”
The latest hit to the company’s share price comes as Boulder Brands is facing a pair of class-action lawsuits, as well as a lawsuit filed by H.J. Heinz Co. (NYSE: HNZ) over a trademark dispute. The class-action suits allege that the company, between Dec. 23, 2013 and Oct. 22, 2014, made false and misleading statements that overstated the financial well-being of the company and failed to disclose various adverse details related to the company’s financial health and outlook.
After the company announced Oct. 22, 2014 that the company had faced “a number of headwinds that impacted our financial results … resulting in a larger than expected decline,” Boulder Brands shares dove from $12.73 to $8.99 in a two-day span. They’d hovered between $8 and $11.68 since until crashing further Wednesday.
Boulder Brands owns a list of brands that include Evol, Udi’s Gluten Free, Earth Balance and Smart Balance.
“I am proud of what we have created together,” Hughes said in the release. “I am confident that I am leaving the company in excellent hands with Jim and our strong management team, and I look forward to watching the next phase in the evolution of this great company.”
Leighton, 59, has served on Boulder Brands’ board of directors since 2007 and as COO since October 2013. He had previously served as president of Perdue Foods and as a senior vice president at ConAgra Foods Inc., as well as holding senior management and executive positions with Celestial Seasonings, The Hain Celestial Group, and Nabisco.
In the press release, he hinted that certain strategic shifts would be coming for Boulder Brands.
“We have great brands in great categories that offer food solutions that retailers are seeking,” Leighton said. “One critical objective is to refocus our spending priorities toward consumer marketing programs that will more effectively introduce our brands to a broader base of consumers and better support these brands as distribution gains continue.”
The expectation of decreased second-quarter sales comes just a few weeks after the company reported first-quarter results that included $1.8 million in net income and a 5 percent increase in revenue vs. the year before.
Earlier this week, Boulder city manager Jane Brautigam approved up to $20,000 in rebates on permit fees and sales and use taxes as incentive for the company’s expansion of its downtown Boulder headquarters last year. That came a year after the city had granted the company a similar package worth $60,000.