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· Posted on
September 27, 2022

Costa Group says "thanks-a-melon" to its CEO after just 18 months in the hot seat

Costa Group announced a new CEO just 18 months ago... but now its CEO suddenly resigned.

What's the key learning?

  • Costa Group has grown to become the leading wholesaler of fresh fruit and veggies in Australia and it just announced a new CEO 18 months ago.
  • When Costa Group's CEO suddenly resigned, its share price plummeted 12%, which investors didn't love.
  • Sudden CEO departures almost always leads to investor uncertainty.

👉 Background: Costa Group started way back in the early 1900’s as a small fruit shop in Warrnambool, Victoria and then Geelong

👉 What happened: Since then, it has grown to become the leading wholesaler of fresh fruit and veggies in Australia. It sells everything from blueberries, tomatoes, bananas and avos to supermarkets and fruit shops.

👉 What else: Costa Group announced a new CEO just 18 months ago.. but now its CEO has suddenly resigned. Investors didn't love the news - its share price plummeted 12%. It just goes to show how important stability is at the top of a company.

What's the key learning?

💡Sudden CEO departures almost always leads to investor uncertainty.. And investor uncertainty almost always leads to a drop in a company's share price.

💡For investors, a sudden departure brings up a range of questions:

  • What do the CEO and Board know about the company that we don't know?
  • Will a change in leadership change company strategy - for better or worse?
  • Will a change be good or bad for the company’s profit?

💡And Costa Group isn't the first company to take a hit.

  • Magellan Financial Group shares dropped 11% when its Chairman suddenly stepped down.
  • The Reject Shop shares plummeted 25% after the abrupt resignation of its CEO.

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