Safestyle UK plc (LON:SFE) has announced the appointment of Mike Gallacher as Group CEO. Gallacher will be appointed to the Safestyle board today in line with succession plans that have been underway for some time. He takes over from incumbent CEO Steve Birmingham who will stay on as an Executive Director for the remainder of 2018 to ensure a smooth handover process. Gallacher has notable experience in the highly competitive FMCG space and joins Safestyle from First Milk Limited, the UK dairy company, where he successfully implemented a major restructuring and turnaround strategy. Safestyle has faced tough trading conditions in recent months with a softer market backdrop exacerbated by aggressive competitive practices from a new market entrant. We revised our forecasts alongside the Group’s recent trading update (23rd April) to reflect these challenges. At current levels the shares trade on an FY18 PE ratio of 13.4x falling to 9.0x in FY19.
Executive changes: Mike Gallacher’s appointment as CEO is the third senior leadership change announced in recent weeks. Last month (22nd March) the Group announced Rob Neale, Head of Leisure Travel Finance at Jet2.com and Jet2 Holidays, would replace Mike Robinson as CFO, with Robinson stepping down from the board on 31st May following 10 years with the Group. Peter Richardson assumed the position of Group Chairman on 23rd April following the resignation of Steve Halbert. Incoming CFO Neale and Chairman Richardson both worked at Dyson at the same time. Steve Birmingham will remain an Executive Director for the remainder of 2018 to aide in the handover process as well as seeing a number of ongoing projects to their conclusion. Whilst the announcements of the changes in CFO and CEO have been close together it should be stressed succession planning for both positions has been underway for some time.
Track record: Gallacher has over 20 years of commercial and operational experience in the highly competitive FMCG space, both in the UK and internationally. During his tenure as CEO of First Milk Limited, the major UK dairy company, he successfully realised £30 million in improved profitability in 24 months, an accomplishment that was recognised by the Institute of Turnaround Management’s ‘Financial Restructuring of the Year 2016’. He has also held senior roles at Mars Inc., including UK Managing Director for Mars Pet Care and has led significant business turnarounds in Asia for the Mars Group. Prior to that, he was a British Army Officer for eight years.
Valuation: On FY18 earnings, Safestyle UK plc trades on a PE ratio of 13.4x on last night’s 55.8p closing share price, falling to 9.0x in FY19. Any indication of stabilisation in the businesses going forwards should see the shares rally.