Hain Celestial shares descended further on Thursday as quarterly results left investors doubting the US food giant’s turnaround strategy.
The owner of Linda McCartney, Ella’s Kitchen, and New Covent Garden saw quarterly revenue fall 7% to $395m in the three months to September, as volumes fell 4% and prices came down 1%.
While the company reaffirmed guidance for “flat or better” annual organic net sales growth, investors are jittery with shares in the Nasdaq-listed company falling 13% in early trading. It is down more than 80% since a peak in late 2021.
Hain Celestial’s US sales were hit hardest last quarter, down 11% to $231m. Internationally, where the UK is the group’s biggest market, sales fell 1% to $163m primarily due to lower sales in meal prep and baby & kids.
Hain Celestial unveiled its ‘Hain Reimagined’ strategy in September last year, pledging to simplify operations, pivot sales to growth, and encourage long-term profitability.
CEO Wendy Davidson said on Wednesday the focus so far had been on streamlining the portfolio and operational footprint, enabling the business to deliver gross margin expansion.
While gross margin is now 20.7%, a 90bps increase from the same period a year before, money continues to flow out of the business. Net losses hit $20 million in the quarter, up from $10m a year before.
But the business believes it is now finally set for growth as it enters 2025. “We have a number of known tailwinds in the back half of the fiscal year which give us confidence in our plan to pivot to growth in fiscal 2025,” said Lee Boyce, CFO.
“We expect productivity to accelerate in the back half and we have the right initiatives in place to drive both margin expansion and net working capital improvements, which will enable us to continue to reduce net debt and improve our leverage.”
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