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Hain Sees Improving Consumer Trends

Hain Celestial Group reported fourth-quarter earnings this week, with net sales of $222.8 million and net income of $6.7 million. For the full fiscal year ended June 30, Hain earned $28.6 million on $917 million in sales. Irwin Simon, Hain's President and CEO, attributed the company's strong performance to sales momentum in North America and Europe, and improving consumption trends for healthy foods overall. According to company statements, Hain generated $18 million in sales from new products at Hain Celestial U.S., and recent acquisitions (Sensible Portions, Greek Gods Yogurt) position the company in high-growth categories with natural products complementary to core product offerings.

hain logoWall Street responded favorably to the news, sending Hain's stock up about 4%. Analysts also responded favorably to improved guidance from Hain for FY2011 by raising their estimates for sales and earnings per share. Hain upped its revenue guidance for FY2011 to $1.025-$1.05 billion, and earnings per share guidance to $1.24-$1.31.

NBJ spoke to Simon a few weeks ago in reporting our current issue on the finance & investment climate for nutrition companies. When asked about his company's strategic response to the economic downturn, Simon said: "When the turndown hit a year and a half ago, we saw the consumer trading down and buying private label, so we knew we had to take our products to other classes of trade. Our model shifted to go out to more and more of the mass market. At the same time, we continued to work closely with Whole Foods on innovation, new products, and pricing to make sure there was value there. Whole Foods is our biggest retail customer today, so that was clearly important. There’s good growth among the mass market, good growth among club stores, and we are absolutely seeing growth come back in certain retail supermarkets."

Two industry analysts would concur with this optimistic outlook. Scott Van Winkle of Canaccord Genuity sees reaccelerating growth for Hain. "I'm expecting much better sales and earnings performance over the next 12 months," said Van Winkle. Andy Wolf of BB&T Capital Markets thinks the company's recent moves in the U.K. will turn that business around to at least break-even status. "Hain is really well positioned to have a good turnaround in the next couple of years," said Wolf. "The stock performance has lagged, but we think it could play catchup."

Wolf also sees the investment in Hain by Carl Icahn—Icahn owns about 5.65 million shares representing about 14% of the company—as a way to bring more financial acumen to an already well-run company. We asked Simon about that investment from Icahn. "I think Carl Icahn is a smart guy," said Simon. "He likes what we’re doing and likes our brands. I look at him as an opportunistic investor. This is one of his first forays into this category. I think he walked around Whole Foods, saw our presence there, and that’s what got him excited."

NBJ tackles consumer research in our next issue, slated for publication in September. We'll focus our critical eye on the modern wellness consumer, and strategies to best utilize research to meet a complex array of global consumer demands.

Related NBJ links:

The Hain Celestial Group’s Irwin Simon Talks Acquisitions with NBJ

2010 Healthy Foods Report

2010 Nutrition Industry Overview Archived Web Seminar

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