Hain Celestial today (9 February) booked widening second-quarter losses amid falling sales and the recording of impairment charges in the US and the UK.
The Celestial Seasonings tea and Earth’s Best baby food owner posted a net loss of $116m for the three months to the end of December. A year earlier, the US-based group ran up a quarterly loss of $104m.
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Second-quarter net sales dropped 7% to $384.1m amid a 7% decline in organic sales.
In North America, Hain Celestial’s organic net sales fell 10%. The company said the slide was “primarily driven” by its snacks and baby-formula businesses.
Last week, Hain Celestial announced a deal to sell its North American snacks business as part of an ongoing review of its operations.
The net sales from the group’s international division fell 3% organically but rose 2% on a reported basis to $186.3m thanks to exchange rates.
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By GlobalDataThe second-quarter accounts included $132m of impairment charges on assets in the US and the UK, including a $119.9m goodwill impairment.
Hain Celestial’s lower quarterly net sales led to a 20.3% fall in its gross profit to $74.4m and contributed to an operating loss of $98.8m, up from one of $91.9m a year earlier.
“We demonstrated meaningful strategic and operational progress in the second quarter and are advancing our turnaround strategy with urgency,” president and CEO Alison Lewis said.
“We took bold steps to sharpen our portfolio and strengthen our balance sheet through the divestiture of our North American snack business, giving us greater financial flexibility alongside an improved margin and cash flow profile.
“Our core categories are stable, our operational execution is improving and we demonstrated strong cash delivery in the quarter.”
Hain Celestial launched a “comprehensive review” of its portfolio last May alongside the departure of then president and CEO Wendy Davidson. Lewis was appointed interim president and CEO and confirmed in the roles permanently in December.
In November, Lewis set out plans for Hain Celestial to cut around 30% of its SKUs in North America.
She added today: “The actions underway across simplification, pricing, innovation, and productivity provide a clear path to sequential improvement in the back half of the year. We remain confident in our path forward.”
By 08:11 ET today, Hain Celestial’s share price was up 4.24% in early trading at $1.23.
Mizuho Securities analyst John Baumgartner said: “Q2 results trailed Wall Street on revenue and margins but, as the to-be-divested snacks was the main headwind, performance versus expectations should improve going forward. Revenue trends remained broadly disappointing this quarter aside from snacks.”
