Unilever Plc (UL) recently announced that it is voluntarily recalling pints of its Ben & Jerry’s Chocolate Nougat Crunch Ice Cream as the product label did not include the required allergic precautionary statement.
Unilever had sold the recalled product to its retailers across the U.S., but the company believes that the recall does not include 2.4 gallon containers of chocolate nougat crunch served at Ben & Jerry's franchised Scoop Shops. The company has warned consumers not to consume the product and return the items to the store from where it was purchased, as it can be hazardous for people who are allergic to peanuts or tree nuts which include chestnuts, Brazil nuts, walnuts, hazelnuts, pecans, pine nuts and cashews. However, there have been no complaints made with respect to the product and thus we believe the recall will not have any material impact on the company’s earnings.
Besides Ben & Jerry’s ice-creams, Unilever has a wide portfolio of globally recognized flagship brands, such as Axe/Lynx, Lipton, Blue Band, Knorr, Dove, Lux, Flora/Becel, Heartbrand, Omo, Rexona and Sunsilk, which provide a dominant position to the company in the sector. The company continues to introduce new brands, enhance them, and launch these brands in new emerging markets.
Additionally, the company has been strengthening its portfolio by expanding in international markets through acquisitions. With the acquisition of the Personal Care business of Sara Lee Corporation (:SLE) in the fourth quarter of 2010, Unilever added leading brands like Radox, Duschdas and Neutral to the company's portfolio in Western Europe. In addition, Unilever acquired Chicago-based Alberto Culver in May 2011 and controlled 82% ownership in the Russian brand of Concern Kalina in December 2011.
However, the company faces continued input cost headwinds and a difficult macro-economic environment which shows no signs of near-term abatement. We therefore remain Neutral on the stock. The stock also carries a Zacks #3 Rank in the near term (‘Hold’ rating).
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