Hain Celestial Failed to Impress in First Quarter of Fiscal 2016
The US segment
Hain Celestial Group (HAIN) operates through four segments that are the United States, United Kingdom, HPPC (Hain Pure Protein), and Rest of World, comprised of Canada and Continental Europe. The US segment reported disappointing results when compared to all of the previous quarters of fiscal 2015. It recorded 1Q16 net sales of $331 million, a fall of 2% compared to 1Q15. Operating earnings for this segment fell by 11% to $46 million in comparison to 1Q15.
Operating margin fell compared to all the last quarters in fiscal 2015. The US grocery market—that contributes most of the US segment’s sales—has been falling recently. Management mentioned the factors that contributed to the fall in the US segment’s performance, including the slow recovery of the nut-butter business, the warehouse club business that management decided to discontinue, and weakness in the natural foods business.
In the United Kingdom segment, net sales were $165 million, a fall of 4% compared to 1Q15.
HPPC reported net sales of $124 million, and the Rest of the World segment reported net sales of $67 million. Both these segments showed impressive sales growth of 75% and 30%, respectively.
In general, all three segments showed better operating earnings this quarter compared to 1Q15.
The company’s competitors in the industry include Pilgrim’s Pride (PPC), McCormick & Company (MKC), and Keurig Green Mountain (GMCR). They reported operating margins of 10.9%, 13.1%, and 16.6%, respectively, in their last quarter. The First Trust NASDAQ-100 Equal Weighted Index Fund (QQEW) invests 0.91% of its portfolio in GMCR.
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