(Reuters) - Kellogg Co (K.N) replaced chief executive John Bryant with food industry veteran Steven Cahillane on Thursday as the world’s largest cereal maker continues efforts to halt two-and-a-half years of declining sales.
Kellogg, like other packaged food makers, has been struggling with falling demand as consumers shift to healthier alternatives, and in Bryant’s near seven-year tenure, the company has cut jobs and sought to streamline production to bolster profits.
But his zero-based budgeting plan - which requires expenses to be justified for each new period - has also seen sales decline steadily since the start of 2015.
“Given the suddenness of the announcement, many investors this morning have asked whether his (Bryant’s) retirement was his own choice,” J.P. Morgan analyst Ken Goldman said in a client note.
Consultants, who know the industry well, indicated that Kellogg was not happy with its performance and the board wanted to make a change, Goldman added.
Bryant’s retirement also comes nearly two months after a distribution model overhaul of Kellogg’s U.S. snacks unit to supply through warehouses rather than direct-to-store.
Kellogg’s shares have risen nearly 24 percent since 51-year-old Bryant joined the company.
The Cheez-It cracker maker on Thursday also reaffirmed a full-year 2017 forecast for a 3 percent decline in currency-neutral comparable net sales this year and earnings of $3.97-4.03 per share.
Cahillane, 52, who will be paid an annual base salary of $1.3 million in his role as Kellogg’s CEO, which takes effect on Oct. 2, most recently served as chief executive at Nature’s Bounty and has held senior roles in Coca-Cola Co (KO.N) and Anheuser Busch Inbev NV (ABI.BR).
The Corn Flakes maker’s shares were marginally down at $62.81 in afternoon trading on Thursday.
Reporting by Gayathree Ganesan in Bengaluru; Editing by Savio D'Souza, Patrick Graham and Martina D'Couto