Organic and natural products company Hain Celestial will sell its organic poultry business for $80 million as part of its plan to focus on its core, more profitable brands, the Lake Success company said Thursday.
The company made the announcement the same day it reported another quarter of losses as it continues to cut less-profitable product lines.
The Hain Celestial Group Inc. reported a net loss of $65.8 million in the third fiscal quarter that ended March 31, compared with net income of $12.7 million in the same period a year earlier.
In continuing operations, net income was $10.1 million in the third quarter, compared with $25.2 million in the prior year.
Net sales fell 5 percent from the prior year to $599.8 million.
Hain shares dropped more than 6 percent, to $22.19, after the announcements. At the market's close Thursday, the share price was $22.92.
“Our team is in the early innings of executing on our transformational strategic plan to simplify our portfolio, strengthen our core capabilities, reinvigorate profitable top-line growth, and expand margins, return-on-invested-capital and cash flow,” Mark L. Schiller, Hain president and CEO, said in a statement. He took over those roles in November.
Hain’s products, sold in 70-plus countries, include Celestial Seasonings tea, Sensible Portions snacks, Terra chips, Rudi’s Organic Bakery breads, Earth’s Best baby food and The Greek Gods yogurt.
Hain Celestial said Thursday it will sell its organic poultry business, Hain Pure Protein Corp., which includes the FreeBird and Empire Kosher businesses, to Manhattan-based Aterian Investment Partners III. The sale should be finalized by June 30, the end of Hain’s fiscal year, the company said.
Earlier this week, Hain finalized the sale of its WestSoy tofu, seitan and tempeh businesses to Keystone Natural Holdings, a Philadelphia-based portfolio company of Chicago-based investment firm Keystone Capital. The terms of that deal were not disclosed.
The sale of the businesses will help Hain's balance sheet as the company continues to focus on cutting products that are a drag on growth, Schiller said during a call with analysts Thursday. Part of the drag on earnings this year was due to those products being cut, even though some were profitable, Schiller said.
In cases in which retailers want to keep those products on shelves, Hain will require price increases to improve margins, he said.
Hain had 2,200 products and more than 50 brands, as of February.
The company is focusing its resources on the 11 brands that represent 50 percent of revenue and 90 percent of profits, Rebecca Scheuneman, equity analyst at Chicago-based Morningstar Research Services LLC, wrote in a note Thursday.
Morningstar is seeing signs that the product reductions are working, and is encouraged by Hain's starting to simplify operations with the sale of some businesses and the company's boosting research and development, marketing, and operations, including some new hires, she wrote.