Cott Replaces Chief Willis With Director Gibbons

Cott Replaces Chief Willis With Director Gibbons

Cott Replaces Chief Willis With Director Gibbons

Cott Corp., the world's biggest maker of store-brand soft drinks, replaced Chief Executive Officer Brent Willis with Director David Gibbons after Willis failed to turn the company around, sending the shares up the most in 17 years.

The board named Gibbons interim CEO immediately while it looks for a permanent replacement for Willis, who was hired in May 2006, the Toronto-based company said in a statement. Willis, 47, and the board reached a ``mutual decision'' yesterday that he step down, Cott spokeswoman Lucia Ross said by phone today.

Cott posted a loss in 6 of the past 10 quarters as it faced higher expenses and a decline in soda consumption in North America. The soda maker said last month that Wal-Mart Stores Inc., its biggest customer accounting for 39 percent of sales last year, may reduce shelf space for its Sam's Choice soft drinks, which are made by Cott.

``They hitched their wagon to the Wal-Mart horse,'' said Greg Eckel, who helps manage about $1.3 billion in assets at Morgan Meighen & Associates in Toronto. ``That was playing out, but now it looks like it's turning on them. It's such a big part of them.''

Cott gained 49 cents, or 26 percent, to C$2.34 by 4:10 p.m. on the Toronto Stock Exchange, the biggest jump since March 1991. The shares have dropped 64 percent this year, after falling 61 percent in 2007, the fourth consecutive annual decline. Cott was the worst performer on the Toronto Stock Exchange's benchmark index last year.

Price Increases

Willis raised prices in the past year to try to compensate for higher costs for aluminum cans, plastic bottles and corn- based sweetener.

``Given Cott's recent financial performance, we do not believe the change will be seen as a surprise,'' David Hartley, an analyst with BMO Capital Markets, said in a note to clients. Willis's departure is ``potentially positive,'' he said. Hartley rates Cott shares ``underperform.''

Gibbons said in the statement that he will continue efforts introduced by Willis to develop new products such as teas, energy drinks and water as North American consumption of soda pop declines, while ``redoubling'' efforts to work with retailers to sell their beverages.

Before joining Cott, Willis was an executive with InBev NV, the world's biggest brewer, where he was credited with increasing sales and turning around ``numerous markets,'' Cott said when he was hired. He replaced John Sheppard, a former Coca-Cola Co. executive who served as Cott's chief for 20 months.

Higher Costs

``No one has lasted long,'' Eckel said. ``I don't hold out much hope their prospects will turn around anytime soon. Rising costs will continue. Anything that goes into food has gone up like crazy.'' Morgan Meighen sold its Cott shares ``several years'' ago, he said.

Crude oil prices have gained more than 60 percent in the past year, pushing up the price of resin to make plastic bottles. Corn futures climbed 24 percent during that period, driving up the price of syrup used to sweeten soft drinks.

Cott said last month that shipments of soda in North America dropped 4.8 percent in the fourth quarter.

Ross declined to comment on severance payments for Willis. Under his contract, he was to receive two years' salary if he was fired or quits, plus any shares to which he was entitled under the company's bonus program, Cott said in a regulatory filing in March last year. Willis's annual salary was $700,000.

Gibbons, who was appointed to the board in March 2007, was CEO of drugmaker Perrigo Co. from 2000 to 2006, Cott said.