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Hain Celestial considers further divestment of brands

The natural and organic food company Hain Celestial is in the midst of paring down its offerings to become a smaller and more profitable company. In its most recent earnings call, the company hinted that it may consider “exploring optionality” for its food service-oriented fruit business. Baby food was also singled out as a segment that has been drawing down company revenues.

“We continue to have success selling or exiting small and non-strategic brands that consume a disproportionate share of management time and add supply chain complexity,” said CEO Mark Schiller. He said that the food service fruit business was “very low margin and it has become a very significant drag on our performance….and muting the overall performance for the company.”

Already, the health food company has divested the French brand Danival, Casbah, Europe’s Best and Rudi’s Organic Bakery this year. Additionally, the company has shuttered DeBole’s, Little Bear and Gluten Free Bakery, which the company deemed to be unprofitable.

In its fourth quarter earnings, it’s net sales figures for North America were up 5% for the company. However, international net sales were down 3%, with particular declines in the fruit business in the UK. Overall, the fruit business in foodservice makes up 20% of the company’s international sales. In the earnings call, Schiller called the loss a “$25 million drag.”

While the company said that its baby food segment was hard hit by the pandemic, there has been a slight rebound in sales as more people are leaving their homes more frequently. Ella's super-premium brand in the UK was also called out for doing exceptionally well in terms of sales this past quarter.

Financial problems are nothing new for Hain Celestial who had a second quarter this year that shocked investors and caused stock prices to drop 19% and even stop trading. In 2016, the company delayed its earnings report due to accounting errors. Nevertheless, the company has been looking to shape up and pare down its unwieldy portfolio of over 50 brands. By simplifying the business, the company is looking to find clarity and direction and hopefully come out on top.