Sodastream President Will Resign Shortly, Detwiler Analyst Says

Detwiler Fenton’s Jim Sanderson said that Sodastream International Ltd (NASDAQ: SODA) US President John Sheppard is expected to resign shortly. He added, “Despite management’s positive outlook last quarter, we believe that many of the initiatives targeted to turn-around SODA US are not yielding results.”

Sheppard’s exit would be a result of several setbacks, which reflects how challenged Sodastream’s US business continues to be. Sheppard’s outlook for US performance resulted in the resetting of expectations too high, analyst Jim Sanderson mentioned.

Sheppard’s commentary during the Q4 conference call implied a sharp recovery in sales among top retail accounts. This level of growth could not be validated. “Further, our checks suggest that end-of-quarter shipments into retail channels may have resulted in inflated sell-in last Q which was much stronger than sell-through rates at retail,” Sanderson commented.

The analyst expressed concern that Sodastream was at risk of "pulling" shipments forward, which would exert pressure on shipment rates in the current quarter, and beyond.

Other Observations

• Fizz Concierge is expensive and “appears to be the reason why consumer engagement has not been strong,” Sanderson said. He added that consumers are unlikely to embrace the new program at current prices.
• An acceptable price or brand position has not been found for Sodastream’s new Spirit sodamaker
• Consumer reviews of new flavors remain consistently negative.