The Hain Celestial Group, Inc. HAIN recently announced plans to appoint a new chief executive officer. Meanwhile, Irwin D. Simon, the present founder, president and chief executive officer, will serve as non-executive chairman of the board.
Concurrent with the announcement, management reiterated fiscal 2018 financial guidance. Notably, Hain Celestial continues to expect earnings per share in the range of $1.11-$1.18 and net sales between $2.43 billion and $2.50 billion. The company is also progressing with plans to divest Hain Pure Protein Corporation in the first half of fiscal 2019. This divestment is likely to boost efficiency and simplify brand portfolio.
Apart from this, Hain Celestial is undertaking several other initiatives to boost the top line, which missed expectations in the third quarter. The company initiated a strategic review under Project Terra in fiscal 2016 and expects to generate worldwide cost savings worth $350 million through fiscal 2020 (comprising annual productivity).
However, the company continues to witness increase in SG&A expenses. Notably, SG&A expenses for the third quarter rose 13%. As a percentage of sales, the same increased 50 basis points (bps) to 13.4%. In the second and first quarter, SG&A expenses increased 6.1% and 6.8%, respectively. This led to the contraction of operating margin by 110 bps.
Further, this Zacks Rank #5 (Strong Sell) stock faces strong competition in the natural and organic foods market and the personal care products segment. This may compel the company to embrace aggressive pricing and promotional strategies which may further dent margins and hurt the top line. Apart from these, currency fluctuation is another headwind.
Consequently, Hain Celestial’s shares have lost 6.5% in the last three months, against the industry’s rise of 4% and the overall sector’s decline of 2.7%.
3 Stocks Hogging the Limelight
Medifast, Inc MED has a long-term earnings growth rate of 15% and sports a Zacks rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
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The Chefs' Warehouse, Inc CHEF has a long-term earnings growth rate of 22% and carries a Zacks Rank #2.
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