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Investing.com -- Shares of Hain Celestial (NASDAQ:HAIN) tumbled 14% after the company reported fiscal second quarter earnings that fell short of Wall Street expectations. The health and wellness company disclosed a Q2 EPS of $0.08, which was $0.04 below the analyst estimate of $0.12. Revenue also missed the mark, coming in at $411 million against the consensus estimate of $432.49 million.
The decline in Hain Celestial’s stock is attributed to its reported net sales decrease of 9% YoY and an organic net sales decrease of 7% compared to the same period last year. Challenges such as ineffective marketing and promotions in their snacks segment and supply chain issues contributed to the poor performance. Despite these setbacks, President and CEO Wendy Davidson emphasized the company’s strong operating cash flow and debt reduction, as well as improvements in the baby & kids and meal prep categories.
Davidson also highlighted the company’s strategic focus on better-for-you food and beverages by exploring options for its personal care business. However, the net loss widened significantly to $104 million, compared to a net loss of $14 million in the prior year period, largely due to non-cash goodwill and intangible asset impairment charges.
Jefferies analyst Kaumil Gajrawala reiterated a Hold rating and a price target of $7.55 on Hain Celestial. Gajrawala pointed out the underperformance in organic sales and adjusted EBITDA, attributing it to execution and operational issues. "Soft 1H and macro uncertainty the main factors for lower guidance," the analyst commented, noting the challenges posed by the first half of the year and the uncertain economic environment.
For the fiscal year 2025, Hain Celestial has revised its guidance, expecting organic net sales growth to be down between 2 to 4%, adjusted EBITDA to be flat YoY, and an increase in gross margin by at least 90 basis points. The company also anticipates a free cash flow of at least $60 million. These revised projections reflect the company’s efforts to address execution challenges and capitalize on recent distribution wins and the recovery of its infant formula supply. However, the updated guidance also accounts for the challenging macroeconomic backdrop.
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