Orient-Express Closes 3.5% Lower, Worsens Month to Date Decline

Shares of Orient-Express Hotels OEH, operator of a global chain of luxury hotels, closed approximately 3.5% lower today, contributing to a decline of around 23.3% this month. During this month, Orient-Express issued a first quarter earnings release on May 4th containing an adjusted loss per share of 16 cents. This loss per share was not as negative as the consensus analyst expectation of 18 cents. In the earnings conference call, previous Interim CEO and current Chairman of the Board Bob Lovejoy described the company's business outlook as one of “tempered optimism.” In addition, on May 15th the company announced that it would replace Interim CEO Lovejoy with another Interim CEO, Philip Mengel. Before becoming Interim CEO, Mengel served as Chairman of Orient-Express's Audit Committee. Orient-Express announced the previous permanent CEO's resignation in July 2011, citing that it was for “personal reasons." In the May 15 announcement, Lovejoy said that Orient-Express was splitting up the positions of Interim CEO and Chairman because the combined positions were too heavy of a workload. The company said Lovejoy would remain as Chairman of the Board. Investors might be skeptical about Orient-Express's replacement of an Interim CEO with another Interim CEO. Even one CEO replacement is often considered to be a sign of instability; two replacements within a year could be an even worse sign. For Orient-Express' second quarter, five analysts who cover the company have a consensus expectation for adjusted earnings per share of 14 cents.

Disclosure: At the time of this writing, I did not own shares of any companies mentioned in this post.