Hain to sell Pure Protein to focus on core brands, CEO says

Organic and natural products company Hain Celestial Group Inc. said Wednesday it plans to sell its organic poultry business as it focuses on core brands to boost U.S. sales.

The announcement came before shares slid on quarterly earnings results that came in below analysts’ estimates.

The Lake Success-based company has made significant brand investments and is identifying opportunities to drive growth, Hain founder and chief executive Irwin Simon said during a conference call with analysts about the company’s fiscal 2018 second-quarter results.

As part of a plan to simplify its brand portfolio, the company is exploring divestiture of its Hain Pure Protein business, which includes Freebird organic chicken and Plainville Farms organic turkey, executives said.

“The category for fresh, organic, antibiotic-free protein remains strong. While we continue to believe that this is a highly attractive business with very good growth potential . . . we have determined it is not core to our go-forward strategy,” Simon said.

Selling the poultry business might make Hain more attractive to a buyer, Zain Akbari, an equity analyst at Morningstar Investment Service in Chicago, said Wednesday. “From our standpoint, we’ve always argued that Hain would be an attractive partner for the right acquirer.”

Being acquired by a large consumer packaged goods company could assist Hain with its distribution issues, while Hain could provide growth potential because sales of organic foods are growing faster than conventional packaged foods, Akbari said.

Hain did not immediately respond to requests for comment about whether it was setting itself up to attract a buyer.

Net sales for Hain Pure Protein increased 4 percent to $159 million in the second quarter from the same period in the previous year. The company reported net income for the quarter ended Dec. 31 of $47.1 million, or 45 cents per share, compared with $27.2 million, or 26 cents per share, in the same period a year earlier. Net sales increased 5 percent to $775.2 million.

Adjusted net income was $42.7 million, or 41 cents per share, below the $44.1 million and 42 cents per share that analysts surveyed by Bloomberg had expected.

The stock, which slid 7.1 percent to $33.77 Wednesday morning after the earnings release, closed at $34.69.

Hain’s U.S. net sales fell 3 percent to $270.3 million in the second quarter year over year, while net sales in the United Kingdom increased 12 percent to $238.2 million.

In the United States, Hain plans to focus on driving growth of its top 500 products, which fall under its top 11 brands, such as Celestial Seasonings and Alba Botanica, Gary Tickle, chief executive officer for Hain Celestial North America, said during the conference call.

By Tory N. Parrish

tory.parrish@newsday.comToryParrish1

Tory N. Parrish covers retail and small business for Newsday. She has worked at the Pittsburgh Tribune-Review and Observer-Dispatch in Utica, N.Y.