Imperial Brands boss to leave, and Ted Baker takes another hit

“After yesterday’s stock market carnage investors will have been hoping for a much more relaxing day. Sadly the market has slipped further, with the FTSE 100 dropping 0.3% to 7,129. New tariffs on European goods and a weaker oil price were partially to blame,” says Russ Mould, Investment Director at AJ Bell.

“Amid all this turmoil, it is not surprising to see the gold price pick up, rising 1.2% to $1,484 per ounce. Gold has been one of the best performing commodities this year as investors seek to park their money in a so-called safe haven asset."

Imperial Brands

“News that Alison Cooper is to step down as chief executive is the latest example of FTSE 100 companies deciding it is time for someone else to be leader.

“We’ve now had 10 CEOs changes in the FTSE 100 this year and a further seven announced but not yet effective. The average since 2000 is 12 changes a year, suggesting that 2019 is going to be remembered as a period of significant upheaval.

“Chief executives can change for various reasons. Sometimes the boss simply decides they’ve done everything they can and it’s a natural point at which to pass the baton. Other times they leave to take a job at a bigger business.

“But often you’ll see a change at the top because a company is going through turmoil, and that is exactly what’s happening with Imperial Brands.

“The cigarette maker, like many of its peers, has bet on smokeless products for the future of its business. Unfortunately regulatory and political pressure has been so intense that the shift to next generation products has been problematic.

“Imperial Brands’ shares have halved in value since May 2017 and so it seemed inevitable that Cooper would be replaced if the trend continued to be negative.

“The US is also experiencing a large number of CEO changes. August saw the highest number of CEO departures in any individual month in 17 years. The more cynically-minded may wonder whether some American executives are getting out while the going is still good, given how the stock market has been so strong.

“A study by Challenger, Gray & Christmas found that the previous peak in CEO changes (in the US) happened in 2008, just before the wheels fell off the global economy and stock market alike.”

Ted Baker

“Ted Baker has been thrown onto the market’s discount pile after a shocker of a first half results statement. A tough year – and which saw founder Ray Kelvin walk away following a ‘forced hugs’ scandal – keeps getting worse for the company.

“The threads of today’s announcement show the retailer’s problems run deeper than just being linked to boardroom turmoil.

“The company’s own e-commerce sales actually sank in the period when typically online business comes to the rescue in the retail and fashion sphere. And the company was hit by additional costs associated with its acquisition of retailer No Ordinary Shoes.

“Profit warnings are often said to come in threes, and this is the company’s third following significant downgrades in March and June.

“Ultimately Ted Baker’s ability to drag itself out of this mess will be dictated by the strength of its brand and how much it has been tarnished by the events of 2019. Investor’s patience may be threadbare.

“The latest collapse in the share price may help revive speculation over a potential move by Kelvin to take the business out of the glare of public markets through a private equity-backed buyout.”

These articles are for information purposes only and are not a personal recommendation or advice.