Reynolds American Inc.’s (RAI) board of directors announced the reappointment of Susan M. Cameron as the Chief Executive Officer (CEO) and President effective May 1, 2014. In addition, she will continue to serve as a board member.
Cameron retired from the company in 2011 after serving as CEO and President for seven years from 2004. She, however, rejoined the board in Dec 2013.
Cameron’s 30 years’ experience in Reynolds is expected to steer the company through the difficult conditions faced by the tobacco industry. Cigarette shipment volumes are suffering for the past few quarters due to a general shift of demand from conventional tobacco consumption to alternative less harmful tobacco products.
Cameron was the main person behind Reynolds’ ‘total tobacco’ strategic direction. The initiative divides the company's cigarette brands into three categories — growth brands, support brands and non-support brands. This strategy was undertaken to effectively manage brands and generate sufficient financial resources to invest in product and packaging innovation.
Cameron is replacing Daniel M. Delen, who will continue to serve the company as a consultant for two years to facilitate a smooth transition.
Reynolds posted mixed results for fourth-quarter fiscal 2013 as earnings lagged the Zacks Consensus Estimate while surpassing the year-ago results. Revenues, however, missed both year-ago results as well as the Zacks Consensus Estimate due to lower-than-expected volume.
Reynolds has been trying to reduce its reliance on cigarettes by aggressively diversifying into other tobacco products. The company recently launched its e-cigarette brand ‘Vuse’ in Colorado and plans to increase its distribution nationwide by this year.
Reynolds currently carries a Zacks Rank #4 (Sell). Other better-ranked stocks in the consumer staples sector that are performing well at the current level Supervalu Inc. (SVU), Diamond Foods Inc. (DMND) and Mondelez International Inc. (MDLZ). All the stocks carry a Zacks Rank #2 (Buy).
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