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Natural Foods Merchandiser

Hain Celestial recognizes need for channel differentiation

Hain Celestial

Hain Celestial closed its second quarter with record sales and profits but acknowledged it needs to address channel differences to drive success going forward.

On an earnings call Monday, Founder, President and Chief Executive Officer Irwin Simon emphasized Hain’s leadership in growing healthy, organic, non-GMO and simple-ingredient products ahead big-CPGs getting into the market. But he admitted “one size does not fit all” in natural and organic retail. Simon announced the launch of Project Terra to address customer concerns and reap learnings from SKU losses at some retailers that caused a drag on sales growth.

“We will continue to evolve our go-to-market strategy for different classes of trade,” he said during the second-quarter earnings call.

One glove does not fit all when it comes to what and how products are sold at mass, grocery, club, natural and online, he said. “There’s big demand for products not going into mass market. They want uniqueness and differentiation.”

Hain Celestial has retained Boston Consulting Group to identify supply chain efficiency, complexity reduction, and pricing and trade investment, Simon said, to grow Hain from $5 billion to $7 billion. An estimated $100 million in savings and reinvestment toward communicating with consumers is key to the strategy.

Details will follow in the next quarter.

Second-quarter earnings highlights include:

  • Net sales of $752.6 million, an 8 percent increase, or 11 percent on a constant currency basis, over prior year net sales of $696.4 million. Net sales were impacted by $18.3 million as a result of foreign exchange rate movements versus a year ago.
  • Earnings per diluted share of 55 cents, a 28 percent increase; adjusted earnings per diluted share of 57 cents, a 6 percent increase. Foreign currencies impacted reported results by 1 cent per diluted share.
  • Operating income of $87.7 million, 11.7 percent of net sales; adjusted operating income of $92.9 million, 12.3 percent of net sales.
  • Operating cash flow of $93.9 million, an increase of 82 percent over the prior year quarter.
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