The Hain Celestial Group, Inc.’s HAIN recently announced the preliminary results for fourth-quarter fiscal 2022, and outlook for the next fiscal year. Management highlighted that results were hurt by the volatile backdrop in Europe and its decision to eliminate the unprofitable SKUs to solidify HAIN’s position. In addition, currency acted as a deterrent.
This presently Zacks Rank #5 (Strong Sell) player has lost nearly 14%, wider than the industry’s 0.6% decline.
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We note that net sales came in at approximately $457 million and adjusted net sales were $447 million for the fiscal fourth quarter. On excluding nearly 440-basis points of currency headwind, adjusted net sales were almost flat year over year and lower than the earlier view of low-to-mid-single-digit growth. Within North America, the United States recorded growth of 8% in adjusted net sales. Robust distribution and pricing coupled with innovation and share gain aided the top line.
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Excluding roughly 930-basis points of adverse currency fluctuations, International adjusted net sales lagged expectations and fell 10% year over year in the fourth quarter of fiscal 2022. HAIN witnessed several challenges due to inflation, the Russia-Ukraine war, low consumer confidence and sluggishness in the plant-based categories.
For the fourth quarter of fiscal 2022, adjusted EBITDA came in at $35 million, nearly $33 million below the year-earlier quarter’s level. Much of this decrease was seen in the International business unit due to lower net sales, increased inflation and manufacturing deleverage. Also, HAIN has been witnessing inflation and supply disruptions in North America for a while. The metric included charges of about $10 million to eliminate many unprofitable brands and SKUs, and write off obsolete inventory from the sanitizer business to reshape its portfolio. Net income came in at roughly $3 million during the same quarter.
Hain Celestial is poised well with its nine key share brands having robust share gains in various categories. This momentum is likely to enter fiscal 2023. In addition, management is making efforts to address inflation and supply disruptions. It is likely to see momentum in North America during fiscal 2023. HAIN plans to issue fourth-quarter fiscal 2022 results on Aug 25, 2022.
For fiscal 2023, management projects low-single-digit growth in adjusted net sales and adjusted EBITDA on a constant-currency basis. This will be backed by momentum in North America, a solid productivity pipeline and price increases in 2023 to mitigate the anticipated mid-teens inflation year over year.
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Some better-ranked stocks are United Natural Foods UNFI, The Chef's Warehouse CHEF and General Mills GIS.
United Natural Foods distributes natural, organic, specialty, produce and conventional grocery and non-food products. UNFI currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for UNFI’s current financial-year sales suggests 7.6% growth from the year-ago period’s reported figures United Natural Foods has a trailing four-quarter earnings surprise of 29.9%, on average.
Chef’s Warehouse, a distributor of specialty food products in the United States, currently flaunts a Zacks Rank of 1. CHEF has a trailing four-quarter earnings surprise of 355.9%, on average.
The Zacks Consensus Estimate for Chef Warehouse’s current financial-year sales suggests growth of 40.7%from the year-ago reported number.
General Mills, which manufactures and markets branded consumer foods worldwide, currently carries a Zacks Rank #2 (Buy). GIS has a trailing four-quarter earnings surprise of 6.5%, on average.
The Zacks Consensus Estimate for General Mills’ current financial-year sales and earnings per share suggests growth of almost 2% and 1.5%, respectively, from the corresponding year-ago reported figures.
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