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Shares of National Beverage Corp., the maker of popular seltzer water LaCroix, skidded 16 percent after CEO Nick Caporella blamed a drop in sales and profit on "injustice."
The company's profit slumped 39.6 percent to $24.8 million during the three months ended Jan. 26, compared with $41.1 million during the same period a year earlier, the company said in releasing its fiscal third-quarter results after the market closed Thursday. Its revenue fell 2.9 percent to $220.9 million during the quarter, compared with $227.5 million last year.
Caporella apologized for the company's poor performance, assuring investors it wasn't due to "mismanagement nor woeful acts of God." Instead, he said the falloff in sales and profit were caused by "injustice."
"Managing a brand is not so different from caring for someone who becomes handicapped," Caporella said. "Brands do not see or hear, so they are at the mercy of their owners or care providers who must preserve the dignity and special character that the brand exemplifies."
A lawsuit filed in October accused the popular sparkling water company of mislabeling its products as all-natural, sending National Beverage Shares lower that day. The suit claimed that LaCroix included non-natural and synthetic compounds in its seltzer.
In January, National Beverage said an independent, accredited lab found that LaCroix did not contain traces of artificial or synthetic additives. At the time, Caporella said in a statement that the "professional liars" used social media to attack the brand's integrity.
The shares continued their slide Friday. Investment firm Guggenheim also cut its rating on the stock to a rare "sell," citing increased competition as well as a drop in popularity and lost market share partly due to the allegations.
Read the company's release below:
"We are truly sorry for these results stated above. Negligence nor mismanagement nor woeful acts of God were not the reasons – much of this was the result of injustice! Managing a brand is not so different from caring for someone who becomes handicapped. Brands do not see or hear, so they are at the mercy of their owners or care providers who must preserve the dignity and special character that the brand exemplifies. It is important that LaCroix's true character is not devalued intentionally − in any way. National Beverage Corp. is and will remain the preeminent innovator that adds zest and authenticity to the 'sparkling water' phenomenon in North America," stated Nick A. Caporella, Chairman and Chief Executive Officer.
"Additionally, gross margins were impacted by volume declines. Comparisons were further skewed by the adoption of the new tax act in the third quarter of the prior year, which included credits and rate reduction adjustments aggregating $11.3 million. Nothing herein mentioned has detracted from the ultimate value and future of our dynamic company.
There is no greater passion than the kind that creates the wonderful refreshment and contentment described as unique! No doubt, the sound and personality of the word LaCroix, coupled with the awesome experience of its essence and taste . . . is unique. One can be induced to purchase by cheapening price or giving away a product, but falling in love with a feeling of joy is the result of contentment. Just ask any LaCroix consumer . . . Would you trade away that LaLa feeling? 'No way, they shout – We just love our LaCroix!' I am positive they respond this way each and every time, " Caporella concluded.