Why Central Garden & Pet Shares Fell
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Central Garden & Pet were getting sent to the pound today, falling as much as 11% after the company named a new CEO.
So what: John Ranelli will replace outgoing CEO Bill Brown as of Feb. 11, though Brown will stay on as chairman. The announcement seemed to catch Wall Street off guard, as there had been no warning of Brown's departure. In many ways, Brown is the face of the company, serving as chairman since 1980, and also as CEO from 1980 to 2003 and then again from October 2007 to now. Ranelli is by no means a newcomer to the company, serving on the board since 2010, and he previously held the CEO title with other consumer-products companies and served as a senior executive at companies such as Timberland and DeckersOutdoor.
Now what: It may not be surprising to see a stock take a fall when it's longtime leader departs. Brown is 70, though, so the company has probably been preparing for a transition. Investors who remember former CEO Glenn Novotny's tenure may be nervous, as the stock crashed in 2007 once growth slowed, but there's no evidence to believe Ranelli's leadership will lead to the same result. Brown will be staying on as chairman, and executive Gus Halas will assist Ranelli with the transition.
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