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TreeHouse to Shut St. Louis Office, Plan for 2020 Underway

Zacks Equity Research

TreeHouse Foods, Inc. THS is on track with TreeHouse 2020 strategic plan, as is evident from its recently announced intention to close the office in St. Louis, MO on Jun 28, 2019. Notably, the closure of the St. Louis office is in line with the company’s ongoing TreeHouse 2020 multi-year restructuring program.

While TreeHouse is focused on reshaping its organization by trimming its segments from five to four, it also remains on track to consolidate locations. Total cost related to the closure of the office is anticipated to be roughly $7.8 million or 10 cents per share, which is likely to be incurred mainly during the three quarters ending Jun 30, 2019.

Management stated that work associated with St. Louis will be merged into TreeHouse's existing facilities in Oak Brook, IL. This closure is expected to impact around 170 workers. The company will offer separation reimbursement and outplacement support to the affected workers.

Notably, the TreeHouse 2020 strategic plan has been designed to restructure and realign the business as a whole. Alongside cost savings, the initiative is expected to manage the company’s portfolio, as well as optimize production and supply chain. The plan aims to improve its operating margin by 300 basis points within 2020-end, via undertaking complete business integration and expense reduction.

TreeHouse expects to invest these savings in market-differentiated capacities for catering to consumers’ ever-changing demands. The company made notable achievements in the first phase of the program. Further, it remains on track to simplify structure and undertake plant consolidation. Management earlier stated that the rollout of the TreeHouse Management Operating System was expected to be completed in 2018.

Moreover, TreeHouse Foods’ Structure to Win program is focused on aligning SG&A expenses with its division structures. This in turn is likely to enrich customers’ experience.

Such endeavors have helped shares of this Zacks Rank #3 (Hold) company to gain approximately 19% over a month, outperforming the industry’s growth of 8.9%.

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