Dive Brief:
- Grocery Outlet announced Wednesday that President and CEO RJ Sheedy has left the company and resigned from its board of directors, effective immediately. Sheedy has served as president since 2019 and as CEO since the start of last year.
- “Sheedy’s decision to resign as a director was not due to any disagreement with the Company’s operations, policies or practices,” the discounter said in a securities filing.
- The discounter named Eric Lindberg, the board’s chairman and a former CEO of the company, as its interim president and CEO.
Dive Insight:
Grocery Outlet did not provide a reason for Sheedy’s sudden departure from the discount grocery chain, but the company also said Wednesday that it is reevaluating its financial outlook for fiscal 2024. While the retailer projected that its net sales for the year will exceed the guidance it issued in August, it said it expects adjusted earnings before interest, taxes, depreciation and amortization to come in lower than expected.
Grocery Outlet reported in August that it believed adjusted EBITDA for fiscal 2024 would fall in the range of $252 million to $260 million, but said Wednesday that it will reduce that guidance when it reports its third-quarter earnings next week. The company provided the financial update in connection with the announcement about Sheedy’s exit.
Investors reacted swiftly to Grocery Outlet’s disclosures that Lindberg is returning to the top job and that the company believes its profitability is falling. Its stock – which had fallen nearly 40% in 2024 as of Tuesday’s close, was off by more than 10% in early trading on Wednesday.
Grocery Outlet’s stock has dropped 39% this year
Grocery Outlet noted that Lindberg — who served as CEO or co-CEO from January 2006 until handing the job to Sheedy on Jan 1, 2023 — has more than 30 years of experience working for the company and was at the helm when it went public in 2019.
Grocery Outlet’s store count more than tripled while Lindberg served as chief executive, and its net sales rose nearly 500% during that period, the company said.
“We are fortunate to have a leader of Eric’s quality and experience to shepherd this transition,” Erik Ragatz, Grocery Outlet’s lead independent director, said in a statement. “The Board looks forward to working with Eric to drive the business as we search for our next leader.”
Sheedy is leaving Grocery Outlet after spending more than a decade with the company. He arrived in 2012 and was in charge of functions including purchasing, marketing, supply chain and strategy ahead of his appointment as president in 2019.
“On behalf of the Board, I want to express my deep appreciation to RJ for his contributions to Grocery Outlet over the past 12 years,” Lindberg said in a statement. “RJ played a critical role in scaling and evolving our business and has set the stage for continued strong growth in the future.”
Sheedy, who earned a total compensation about $6.2 million in fiscal 2023, will receive his base salary for two years as well as other payments, including an amount equal to twice his target bonus for the current year.
