Unilever shocked investors on Tuesday by abruptly dismissing its chief executive, Hein Schumacher, and appointing finance chief Fernando Fernandez as his successor. The decision, aimed at accelerating the consumer giant's turnaround strategy, sent Unilever’s shares tumbling by as much as 3.4% in early trading.

Schumacher, who took the helm on July 1, 2023, was reportedly caught off guard by the move. However, a source close to the board emphasized that the decision was unanimous and not driven by any misconduct. “The board is eager to step up the pace of our strategy execution and realize swift value creation underscored by a change in leadership,” Schumacher said in an email to associates, shared with Reuters.

The leadership shake-up follows Unilever’s underwhelming full-year earnings and increasing pressure from investors to rejuvenate the company’s fortunes. Industry-wide struggles, including supply chain disruptions, soaring commodity costs, and shifting consumer preferences towards budget-friendly alternatives, have compounded Unilever’s challenges.

Schumacher had been widely welcomed as an external CEO appointment, with hopes that his fresh perspective would address years of underperformance. During his tenure, he initiated strategic cost-cutting measures, including plans to separate Unilever’s ice cream division and trim thousands of jobs. He also sought to divest from struggling categories, such as plant-based meat. However, these changes did not translate into immediate performance gains, prompting the board to seek more rapid execution.

The unexpected departure of Schumacher drew mixed reactions from analysts. “We are gobsmacked at the news that Unilever's highly regarded CEO Hein Schumacher is to step down,” RBC Capital analyst James Edwardes Jones remarked. Barclays analyst Warren Ackerman echoed the board’s sentiment, stating that Fernandez is “best placed to accelerate the value unlock.”

Fernando Fernandez, 58, has been with Unilever since 1988 and has held key leadership positions, including President of Latin America and CEO of Unilever Brazil. Before becoming CFO in 2023, he led the company’s Beauty & Wellbeing business. His extensive experience within Unilever and results-driven approach made him the board’s preferred choice to execute the turnaround strategy.

“There is much further to go to deliver best-in-class results,” said Unilever Chairman Ian Meakins, expressing confidence in Fernandez’s leadership.

Some investors initially reacted with surprise but maintained a positive outlook on Fernandez’s capabilities. Harsharan Mann from Aviva Investors, a Unilever shareholder, noted, “We were surprised by the announcement but have a positive view of the CFO ... He is a 30-year veteran of the business who ran the Beauty and Wellbeing division very well.”

Unilever confirmed that Schumacher would step down as CEO in March and officially leave the company by May 31. As part of his exit package, he will continue to receive his annual fixed pay of 1.85 million euros ($1.94 million) until departure, with an additional undisclosed payment for the remainder of his notice period.

In the interim, Srinivas Phatak, Unilever’s deputy CFO and group controller, will serve as acting CFO while the company searches for a permanent replacement.

Despite the leadership change, Unilever affirmed its commitment to its 2025 outlook and medium-term forecasts. “Execution is key,” UBS analyst Guillaume Delmas commented, underscoring the need for swift and effective implementation of Unilever’s strategic initiatives under Fernandez’s leadership.