👉 Background: Reece was founded in Melbourne back in 1919 by Harold Joseph Reece and has grown to become Australia’s largest supplier of plumbing and bathroom supplies in Australia. While Reece listed on the ASX in 1974, the controlling family, the Wilsons, still own over 67% of the business.

‍👉 What happened: Now, Reece CEO Peter Wilson has warned that Reece’s earnings before interest and tax (EBIT) fell 20% in the last financial year to $528 million. This was well below the $580 million analysts were expecting. And while overall sales slid 1% to just under $9 billion, its US business copped the biggest hit.

‍👉 What else: Reece's CEO also warned that the US housing market is expected to stay ‘turbulent’ for the upcoming financial year. Next minute: Reece’s shares tumbled as much as 21%. And, it’s quite unique to see a CEO so downbeat on an investor call… but also acknowledging the reality.

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‍What's the key learning?

‍💡Not all CEOs deliver bad news the same way. The controlling family of Reece still own a significant majority of the publicly listed company. This means that CEO, Peter Wilson, can afford to speak with more honesty.

💡A professional CEO brought in to lead a listed company usually takes a different approach. When things aren’t going well, they might emphasise the ‘resilience’ of the company and highlight the green shoots. They’ll keep an optimistic view to protect market confidence… and their own position.

💡But this optimistic spin isn’t always betterment for the company in the long-term. A study by Credit Suisse found that founders and founding families that retain 20% or more of the company’s capital when it goes public see a 3.1% per annum outperformance when compared to non-family owned companies.