Add an executive shake-up to the list of changes taking place of late at Advantage Solutions Inc. (Nasdaq: ADV), Orange County’s largest and most valuable marketing-focused organization.
Effective April 1, President Jill Griffin will succeed Tanya Domier as chief executive. Griffin will also be named to the company’s board of directors as Domier will transition to executive chair at Advantage, which offers a varied menu of outsourced service offerings to consumer goods companies and retailers.
Services at the Irvine-based company range from helping companies such as Unilever and McCormick & Co. on their individual product sales, to working directly with giant retailers like Walmart and Kroger on their own sales and marketing strategies.
The Irvine-based company’s product line includes everything from in-store samples to full-service creative and digital advertising.
“As I near a decade term as CEO and after multiple years of succession planning with the board, it is time for me to pass the baton to the amazing next generation of leadership at Advantage to write the next chapter in this great company’s story,” Domier said in a statement.
Stock, Labor Costs
The next chapter could prove a challenge, as higher labor costs have affected the company’s profits and taken a hit on the company’s stock. Shares in Advantage fell about 29% in the week following its March 1 forecast for earnings in 2022.
“We believe the stock is unlikely to outperform our coverage universe until a pathway to improved profits and cash flow emerges,” said a March 3 report by Goldman Sachs analyst Jason English, who downgraded the shares from buy to neutral.
“Since we added ADV to the Americas Buy List on November 13, 2020, the stock has declined by 35% while the S&P; 500 rose 22%,” he wrote.
At press time, the company was valued around $2 billion.
In a recent letter to Advantage employees, Domier credited Griffin as her partner in building the business over the past several years.
“Jill has many special qualities that will help her succeed as our next CEO,” Domier said in the letter.
“Not only is she extraordinarily intelligent with great energy and passion for the business, she is a deeply strategic thinker with great vision for the future and a respected leader who lives and embodies core Advantage values,” Domier added.
Griffin, a graduate of the University of Minnesota, joined the company in 2008, starting as president of Advantage’s Marketing Partners. She built the evolving marketing segment into an omnichannel solutions provider and grew the division into a now $1 billion business.
When promoted to chief commercial officer in 2019, Griffin expanded its sales division to provide more digital services.
Due to the pandemic, Griffin accelerated the company’s virtual initiatives to deliver services at a quicker pace.
“These were things that we were working on and then they just became so necessary during the pandemic, that we scaled these services very rapidly, and they are still adding value today,” Griffin told the Business Journal in November, after being honored at the annual Women in Business Awards event.
“We sit between brands and retailers and shoppers, and we are constantly evolving our capabilities to service what those needs are.”
She’s noted there are new categories that Advantage and its clients have adopted to provide more digital versions of in-store advertising.
Griffin’s concerns over employee retention remain as she steps into her new role.
“It’s really important that we’re constantly a place where we can attract and retain the very best talent to come and innovate and grow,” she said.
As of Dec. 31, 2021, Advantage employed nearly 70,000 associates, about 20,000 of which were full time.
SPAC HQ Move
The sales and marketing firm went public through a reverse merger with Florida-based blank-check company Conyers Park II Acquisition Corp. in late 2020. Its shares traded around $10 at the time the reverse merger was announced; they now trade around $6.40.
Advantage was among the first companies in Orange County to use a SPAC, or special purpose acquisition company, to go public. A prior attempt at a traditional IPO was never completed.
Advantage moved headquarters in 2021 to the Lakeview Business Center office complex in Irvine, where it leases 22,000 square foot of office space.
It signed a five-year lease at 15310 Barranca Parkway for its new low-rise headquarters, after being in a high-rise tower closer to the airport. The move was prompted by the emerging need for employee safety in the workplace both during and post-pandemic, officials said at the time.
Domier, who has worked 32 years at Advantage, was first hired by founder Sonny King to run the company’s natural foods team.
At the time, Advantage had only 50 employees and annual revenue of $5 million. Now the company generates more than $3.6 billion of annual revenue.
“She has helped build Advantage into a respected and admired industry leader, positioning the business well for Jill and team to create value in the years to come,” Advantage Chairman Jim Kilts said in a statement.
Advantage on March 1 announced fourth- quarter revenue climbed 21% to $1 billion. Net income was $28 million compared to a net loss of $152 million from a year ago.
The firm saw recovery in its product demonstration and in-store sampling, while maintaining its strong arm in digital services, which hit “high teens” officials said in a conference call with analysts.
However, Advantage guided its adjusted EBITDA to a range of $490 million to $510 million for 2022, which is down 4% from 2021.
The forecast is a “weaker EBITDA outlook than we expected,” Goldman analyst English said.
“One tenet of our buy thesis—that the company would be able to mitigate higher labor costs with the benefit of a higher commission stream on its sales business…and price increases in its marketing business—did not transpire as expected,” English wrote.
“These benefits instead appear to be covering only half of its cost pressure, by our estimation, and we see no end of that pressure in sight given the tight and inflating U.S. labor market,” English said.
Morgan Stanley maintained its equal-weight rating for Advantage and lowered its price target to $7.
When asked about managing labor and wages during its earnings call, Griffin responded, “That isn’t a future growth bucket of investment; it is a required investment given the headwinds we’re all facing and we feel really confident in our strategies to address it,” she said.