What: Home appliance maker Breville Group Ltd (ASX: BRG) shares crashed around 20% today after the group unexpectedly announced its chief executive Jack Lord would step down effective today. In a double disappointment whammy full year net profit was also announced to be marginally down on the prior year, although revenue was up 11.3%.
So what: Investors have reacted violently to the news dumping the stock given that the sudden resignation of the group's respected chief executive suggests there may be trouble brewing at the top of the kitchen appliance group. The group's chairman commenting: "As Breville continues to grow and invest, the business is becoming increasingly global and the Board is determined to have the best leadership in place to deliver the company's growth strategy."
Now what: The chief financial officer has been appointed interim chief executive while the group searches for a permanent replacement. Short-term shocks like these can present buying opportunities to bargain-hunting investors focused on the long term.
Breville's financial results were impacted by softer-than-expected North American sales in the second half, while the rest of the world continues to show good growth. The core Australia and New Zealand market also suffered slightly from weaker consumer confidence that has beset the retail sector in general.
What of the outlook? Investors have also been unsettled by the group stating it expects business conditions to remain challenging and increasingly competitive into FY 2015. However, Breville expects to cook up future profit growth through cost-cutting initiatives and new products which are critical in encouraging consumers to open their wallets.
Selling for $7.31 Breville may be a golden opportunity if it is able to see out this short-term storm.
