(Reuters) - National Beverage Corp’s Chief Executive has blamed “injustice” for lower sales of its fruit-flavored LaCroix sparkling water and likened brand management to caring for a “handicapped” person.
“Negligence nor mismanagement nor woeful acts of God were not the reasons – much of this was the result of injustice!” CEO Nick Caporella said in a statement accompanying third-quarter results on Thursday, which showed a 40 percent slide in profit.
Its shares sank 15 percent on Friday to $58.27, slicing $478 million off the company’s market value.
Graphic: National Beverage stock crushed by sales drop - tmsnrt.rs/2CbD0rQ
The company faces at least one lawsuit challenging its description of LaCroix ingredients as all-natural, which has attracted a slew of negative media reports. National Beverage has said independent tests prove that LaCroix uses only natural ingredients.
A spokesman for the company said Caporella was referring to what he called “unsubstantiated” allegations in the media about LaCroix.
In a bizarre twist, Caporella also likened his fizzy water brand that comes in flavors including grapefruit, peach-pear and cran-raspberry, to a person with disabilities.
“Brands do not see or hear, so they are at the mercy of their owners or care providers who must preserve the dignity and special character that the brand exemplifies,” Caporella said in the statement. “Managing a brand is not so different from caring for someone who becomes handicapped.”
Negative headlines about the company’s all-natural claims are hurting sales of LaCroix, which contributes just under half of National Beverage’s revenue, said Laurent Grandet, an analyst at Guggenheim.
In a report titled “Zero Calories, Zero Sweeteners, Zero Growth,” Grandet cut his rating on National Beverage’s stock to “sell” and lowered his 12-month target to $45 from $72.
LaCroix, which has targeted advertising at millennials as they move away from sugary sodas, is now losing some of its popularity to other sparkling waters including PepsiCo’s Bubly and San Pellegrino.
National Beverage reported third-quarter earnings of 53 cents per share, missing Wall Street forecasts of 76 cents.
Sales of $220.9 million were below the $237 million expected by analysts on average, according to IBES data from Refinitiv.
Reporting by Siddharth Cavale in Bengaluru; Editing by Sai Sachin Ravikumar and Bill Rigby