- Seek Resignation of Lead Director Jason Scher,
Directors Pol Sikar, Jody Levy,
Dorri McWhorter and Perfecto Sanchez and CEO/Chairperson
Julie Smolyansky
- Seek Immediate Termination of Julie Smolyansky's "Chief
of Staff" and Spouse, Jason Burdeen,
a Former Jeweler
- Call for the Adoption of an Anti-Nepotism
Policy
- Call for Operational and Strategic Review of
Business
- Related Presentation
Available www.lifebacktolifeway.com
CHICAGO, July 22,
2024 /PRNewswire/ -- Ludmila and
Edward Smolyansky (the "Smolyanskys"), who beneficially own
approximately 29% of the outstanding common stock of Lifeway Foods,
Inc. ("Lifeway" or the "Company"), today announced their demand
that the Company's Chief Executive Officer, Julie Smolyansky, and certain of the Company's
other directors, resign from their positions. The Smolyanskys
believe these actions are necessary to avoid further
underperformance and mismanagement of Company assets, and that new
leadership can deliver swift and significant changes to
shareholders.
The Smolyanskys' previous campaign, which began in February 2022, called for replacing the Company's
CEO and commencing an exploration of the Company's strategic
alternatives. Lifeway's shares rose approximately 50% following
that disclosure. The Smolyanskys subsequently agreed to
terminate their campaign in exchange for a commitment by the
Company to, among other things, engage a nationally recognized
financial advisor to assist it with the exploration of strategic
alternatives. Edward
Smolyansky stated, "Lifeway did not make a good faith effort
to honor its obligations under our settlement agreement, and by
February 2023 it was apparent that it
had breached the agreement. In light of the board's failures,
we believe that even significant changes are needed, and are
calling for resignations of each of the board's directors, other
than Juan Carlos Dalto, who we
believe is the only qualified independent director."
Last spring, Kanen Wealth Management (KWM) became the fourth
largest stockholder in Lifeway and launched an activist campaign on
June 8, 2023, issuing a scathing
letter critical of Julie and her Board. Lifeways' share price
again rallied 15% on the news. The Smolyanskys believe the board
was never fully informed of this activist campaign by the CEO and
her husband. Director Dorri
McWhorter testified to this under oath in December 2023.
Meanwhile, Lifeway shares have continued to underperform. Since
Lifeway's recent intraday high of $28.61 recorded on May 10,
2024, its stock price has lost approximately 54% of
its value based on the closing price on July 17, 2024.
Lifeway's stock price is also well below several recent public
valuation estimates. In June
2023, KWM estimated the value at about twice sales or about
$20 per share, and currently Lake St.
and Noble Capital have a combined average target of $24 per share, or nearly double today's
price.
Lifeway's CEO also has a credibility issue when discussing
historical results, such as when she recently touted "17
consecutive quarters of revenue growth" and other "monumental
results" mostly driven by volume growth. The reality is very
different.
Since 2016, Lifeway has posted a revenue CAGR of approximately
3.1%, excluding an unauthorized and ill-advised 2021 acquisition of
Glen Oaks Yogurt, as well as heavy post-Covid inflationary related
price increases since 2020. Recently, in the second quarter of
2024, Lifeway secured a limited-time rotation of its flagship
32-ounce kefir in Sam's Club outlets through June.
However, Lifeway's marketing strategy and budget are totally
disconnected from reality. It has completely failed to
capitalize on the Covid 19 stay at home environment in 2020 and
2021. For example, Lifeway's advertising expense as a
percentage of revenue stagnated around 2.5% from 2020 through 2023,
an unacceptable strategy for any consumer packaged goods company in
America, let alone one on the cusp of becoming the "next Tropicana
or Hersheys," as was recently proclaimed by the
CEO.
"Lifeway's pattern of retrenching, doubling down on past
failures, and management's ego-driven inability to self-reflect
make it impossible for the brand to achieve its full potential and
value. For Lifeway to move forward, it must get out of its
own way. Decades old, entrenched leadership must also get out
of the way," stated Mr. Smolyansky.
www.purecultureorganics.com
About:
Ludmila Smolyansky, 74, served as
a director of the Company from 2002 until May 16, 2023, and unanimously elected as the
Chairperson of the Board in November
2002. She has been the operator of several independent
delicatessen and gourmet food distributorship businesses, and
imported food distributorships, and been a leading force in the
health food market for over 40 years. Ludmila Smolyansky and Michael Smolyansky founded Lifeway and she
served as the Company's General Manager. In 2010, she retired as a
Company employee. She continued to serve the Company as its
Chairperson of the Board until August
2022 and served as a consultant to the Company from 2011
until January 2022.
Mr. Smolyansky, 44, served as a director of the Company from
2017 until the 2022 annual meeting of shareholders of the Company.
Prior to January 2022, he also served
as the Company's Chief Operating Officer. He was appointed as Chief
Financial and Accounting Officer and Treasurer of the Company in
November 2004 and appointed as the
Chief Operating Officer and Secretary in 2012. He resigned his
titles as Chief Financial Officer on January
1, 2016 and as Chief Accounting Officer on August 8, 2016. He retained his title of Chief
Operating Officer when the Board appointed Eric Hanson as Treasurer and as Secretary on
October 4, 2019. Mr. Smolyansky also
served as Lifeway's Controller from June
2002 until 2004. Mr. Smolyansky received a bachelor's degree
in finance from Loyola University of
Chicago in December 2001.
Mr. Smolyansky has over fifteen years of extensive financial and
operations experience in the dairy and consumer packaged goods
industries. Under his operational leadership, the Company
successfully integrated several strategic acquisitions and he
successfully led the development of both manufacturing processes
and products.
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SOURCE Pure Culture Organics