By Ian Berry Of DOW JONES NEWSWIRES Dean Foods Co. (DF) President and Chief Operating Officer Joseph Scalzo is leaving the company, the nation's largest milk producer said Tuesday. Scalzo, 52, becomes the second top official to leave the company in the past four months. The Dallas-based dairy company has been badly hurt by weak demand and intense competition from private-label milk, which retailers have used as a loss leader to drive customer traffic. The company doesn't plan to name a replacement, and Scalzo's responsibilities will be taken over by Chief Executive Gregg Engles. The company is finishing a three-year, $300 million cost-cutting program this year, but Engles has said that more cuts are to come. The company in 2010 cut more than 1,400 jobs while closing facilities and slashing delivery routes over the last two years. "It has become clear to the Board, me and Joe that Dean Foods will be best served by a new structure that can move decisively and quickly to execute our strategy while maintaining an extremely tight rein on costs," Engles said in a statement. The news follows the November resignation of Chief Financial Officer Jack Callahan, who was named CFO of McGraw-Hill Cos. (MHP) a week later. Investors have been worried by Dean's debt load and a gloomy outlook for the dairy industry. Engles said during an earnings conference call last month that price pressure from private-label milk brands was finally abating, although he said a quick rebound was unlikely. Some analysts have questioned his forecast for better earnings in the second half of 2011, noting that grain prices are expected to remain high throughout the year, a potential threat to the company's costs. The company's stock closed down 3.4% to $10.20 Tuesday. It is down 30% from a year ago. -By Ian Berry, Dow Jones Newswires; 312-750-4072; ian.berry@dowjones.com
