The City's response to the departure of Premier Foods chief executive Robert Schofield speaks volumes.
Shares in the largest UK food producer rose 4% in early trading last Thursday on news of his retirement next year. The share price has lost almost 85% (at time of writing) since it floated in 2004 at 215p.
Schofield is due to hand over the reins as soon as a successor is appointed "no later than 28 April 2012". Chairman Ronnie Bell praised the acquisitive CEO for creating Britain's largest food producer and bringing together an "enviable portfolio of iconic brands".
But this strategy was let down by poorly timed and expensive acquisitions, says Rollits' Food Group director Julian Wild. "Schofield's big ambition was United Biscuits and when Premier lost out on that, it bought RHM on the rebound. It seriously overstretched itself and got caught out when the market turned down, leaving it with huge debt."
Analysts also question whether Premier has managed to drive organic growth from its portfolio, particularly bread, under Schofield.
After acquiring RHM in 2007, the CEO pledged an end to the problems that had seen sales of the Hovis brand plummet. But he was quickly caught out by the 2008 commodities spike. "The silly b*stards had done nothing to address the problems," he told The Grocer in 2008, after discovering RHM had secured forward wheat contracts for only a few weeks at a time. He claimed better pricing, improved recipes and strong marketing would drive a recovery.
These actions weren't enough. Q1 figures last week for the three months to 31 March revealed sales of Hovis were up 1.6% and non-branded bakery was down 16.5% following the market fall and contract losses. Premier underestimated the tough challenges in UK bread, says Investec analyst Martin Deboo. "There is both overcapacity and strong competition from Warburtons and ABF. They are both privately or quasi-privately owned, so were always going to have deeper pockets than Premier."
So who is best placed to take over? Chief financial officer Jim Smart has been credited for restoring financial stability through disposals, bringing the debt mountain below £1bn, but experts point to COO Tim Kelly as a more obvious frontrunner due to his commercial background. Other external candidates include: Martin Glenn, the highly rated Birds Eye CEO; and Ben Clarke, a former Ronnie Bell acolyte, formerly of Kraft and more recently credited with a turnaround at Burton Foods.
Whoever is chosen will have a tough job to restore sustainable growth vital if Premier is to get its £500m corporate bond away and cut financing costs. "If there were any significant deterioration in trading in the second quarter, that would jeopardise the [bond] issue," warns Shore Capital analyst Clive Black.
And with meat-free and canning operations already out the door, Premier's cupboard is looking pretty bare for other obvious disposals. Analysts suggest an exit for the struggling Brookes Avana would be desirable. The more difficult question is whether it could find a strategic solution or orchestrate an exit from bread, says Deboo. "It has long floated the idea of sharing the bread supply chain with rivals, but so far to no avail. On a sale, there is little doubt that at the right price it would be positive for shareholders. But I struggle to see a way it could happen given industry structure."
The market awaits the next update on 13 May, so for now it's 'wait and see' in the City. "The outlook looks unexciting for some very mature brands," warns Wild. "The share price reflects the prospects."
2001: Robert Schofield joins Premier, taking responsibility for its branded business. Appointed CEO Jan 2002.
May 2002: Acquires Nestlé's ambient food business for £115m, gaining Branston, Sarson's and Sun Pat.
November 2003: Buys Ambrosia and Brown & Polson from Unilever Bestfoods for £105m.
July 2004: Floats on LSE with initial market cap of £526m at 215p a share.
2005: Acquires Birds custard and Angel Delight from Kraft for £70m.
June 2005: Buys Marlow Foods Holdings, owner of Quorn, from Montagu Private Equity for £172m.
August 2006: Completes £460m acquisition of Campbell's UK & Irish business, gaining Oxo, Batchelors, Homepride and Fray Bentos.
March 2007: Acquires Hovis maker RHM for £1.2bn, gaining Sharwood's, Cadbury cakes, Bisto and Mr Kipling.
January 2011: Sells Quorn to private equity firm Exponent for £205m to cut debt.
February 2011: Sells canned grocery operations Crosse & Blackwell to Princes for £182m.
March 2011: Announces plans to launch £500m bond to reduce debt.
April 2011: Premier announces Robert Schofield's retirement.