Hain Celestial to cut 30% of North America SKUs under turnaround

Hain Celestial plans to cut around 30% of its SKUs in North America, the US-based better-for-you food and drink maker’s largest market.

Reporting first-quarter results last week, interim president and CEO Alison Lewis outlined more detail on the priorities set out in September, when she said Hain Celestial would “aggressively” trim the portfolio as part of a turnaround strategy to “stabilise” the business.

“We remain committed to building a winning, simpler portfolio by exiting unprofitable or low-margin tail SKUs, refocusing resources on brands and categories with the highest growth and margin potential,” Lewis said in an investor call.

Specific brands or categories that might be up for disposal were not named or identified for a company that operates across snacks, meal preparation, baby foods, beverages and personal-care products.

“Looking ahead, we are targeting the elimination of approximately 30% of our SKUs in North America through fiscal 2027, representing low value in our portfolio and enabling us to improve supply chain efficiency and shelf productivity,” she added.

“We have implemented a disciplined portfolio management review process designed to continuously assess, add, or retire SKUs, maintaining an optimised winning portfolio, and eliminating reliance on large episodic rationalisation efforts.”

Lewis’ predecessor Wendy Davidson departed the company in May after only joining the group in 2023. During her tenure, Davidson disposed of the snacks brands ParmCrisps and Thinsters but had ruled out the divestment of personal care soon after taking the hot seat.

Davidson had pledged to remove “lower margin” SKUs under her Hain Reimagine transformation initiative, continuing with a programme under previous CEO Mark Schiller.

However, prolonged pressure on sales and profits have weighed on Hain Celestial’s share price, which is down around 80% this year even as the latest results showed early signs of improvement.

“Our near-term priorities remain clear: stabilising sales, improving profitability, optimising cash, and deleveraging our balance sheet,” Lewis said.

“We have unwound much of our global infrastructure and have implemented an operating model designed to empower the regions and prioritise speed, simplicity, and impact across the organisation.”

The Linda McCartney’s plant-based meats and Earth’s Best baby food brands owner reported an annual loss of $531m in September, linked to a pre-tax non-cash impairment charge of $496m.

Hain Celestial also reported a net loss for the first quarter to 30 September of $21m as opposed to a $20m loss in the corresponding period.

The adjusted net loss was $7m, compared to a loss of $4 million. Adjusted EBITDA was positive at $20m versus $22m.

Sales, meanwhile, dropped 7% to $368m and organic sales were down 6%. Hain Celestial attributed the decline to a seven percentage-point decrease in volume/mix with a one-point gain from pricing.

Losses per diluted share were $0.23 compared to a loss of $0.22.

CFO Lee Boyce reiterated guidance would still not be provided for the full year “given the uncertainty around the outcome and timing of the completion of our strategic review”.

While Lewis is reviewing the portfolio Hain Celestial is upping its game on innovation.

“We are encouraged that we have one of the strongest innovation pipelines in our recent history as we aim to significantly increase our contribution from innovation to growth,” Lewis said.

“Hain Celestial to cut 30% of North America SKUs under turnaround” was originally created and published by Just Food, a GlobalData owned brand.

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