IMBBY Imperial Brands PLC (QX)

By Saabira Chaudhuri 

LONDON -- The chief executive of Imperial Brands PLC -- Big Tobacco's longest-serving CEO -- has unexpectedly resigned, the latest fallout from the mounting regulatory headwinds buffeting the industry.

Imperial, which sells brands like Davidoff and Winston, said Thursday it would start searching for a replacement for Alison Cooper, who will leave once a successor is found.

Ms. Cooper was asked by the board to resign in a telephone meeting late Wednesday, according to a spokesman, who cited the increasingly complex environment.

"The board is in agreement that it's time for some fresh thinking," he said.

The move adds to uncertainty at Imperial, which is already searching for a new chairman and last week warned its sales and profit would be lower than expected this year.

The company, more than many rivals, has been under pressure following the Trump administration's plans, announced last month, to ban most vaping products in the U.S. Its shares, little changed Thursday, are down about 15% over the past month.

Ms. Cooper, one of only a handful of women to hold the top job at a FTSE 100 company, joined Imperial 20 years ago, steadily working her way up the ranks to become CEO in 2010.

Since taking the top job, the 53-year-old has led Imperial through a time of huge change: the industry's focus has pivoted toward so-called next-generation products like e-cigarettes and devices that heat but don't burn tobacco as traditional cigarette volumes continued to drop and regulatory hurdles rise.

Ms. Cooper has attempted to shift Imperial's strategy to stay abreast of the changing environment. In 2012, she launched a new unit, with its own CEO, to explore vaping products. In 2015, Imperial bought the Blu e-cigarette brand from Reynolds American Inc. in the U.S., the world's biggest vaping market. Ms. Cooper simultaneously pushed a cost-saving strategy, slashing the number of brands Imperial sold while retaining smokers.

But she ignored the heat-not-burn sector even as rival Philip Morris International Inc.'s device, IQOS, proved successful in several key markets, an omission that was to damage investor sentiment around the company in the years that followed.

Imperial is now far more focused on e-cigarettes than its major rivals, leaving it more exposed to the regulatory crackdown on vaping in the U.S. Regulators are taking a closer look at such products following a surge in teenage vaping and a slew of pulmonary illnesses, and even deaths, tied to e-cigarettes used for marijuana.

Other countries have tightened restrictions on vaping devices too. India recently said it was banning the sale of all e-cigarettes, while China has stopped online sales of products made by vaping giant Juul Labs Inc.

Imperial has separately struggled with its traditional tobacco business, last week citing a tough environment in its Africa, Asia and Australasia division as part of the reason it slashed profit and sales estimates.

Analysts have also criticized the company's management for accounting practices they say don't offer a true picture of performance. Liberum analyst Nico von Stackelberg said the company's shares trade lower than justified given its economic prospects and that "the management of Imperial Brands are contributing to the discount."

A spokesman for Imperial defended the company's accounting policies but acknowledged it could improve transparency of its results. He said Imperial intends to strip out one-off items, such as the profit on sale of assets, from its adjusted profit measures in the future.

Write to Saabira Chaudhuri at saabira.chaudhuri@wsj.com

(END) Dow Jones Newswires

October 03, 2019 05:28 ET (09:28 GMT)

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