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Hain Celestial Failed to Impress in First Quarter of Fiscal 2016

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Part 4
Hain Celestial Failed to Impress in First Quarter of Fiscal 2016 PART 4 OF 6

Hain Celestial Group’s Management View for Fiscal 2016

Management’s view on performance

Irwin D. Simon, founder, president, and chief executive officer of Hain Celestial (HAIN), stated, “We began the fiscal year 2016 with record first quarter net sales and earnings growth. Our diversified portfolio delivered strong growth with contribution from our HPPC (Hain Pure Protein Corporation) segment with our FreeBird and Plainville Farms brands growing 27%, as well as our international businesses in Canada, Continental Europe and the United Kingdom in constant currency, which collectively grew 22%.”

Hain Celestial Group’s Management View for Fiscal 2016

Hain Celestial Group’s Management View for Fiscal 2016

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Management also mentioned in a press release that it expected better results from the US segment. The strong performance in the snacks, tea, yogurt, and personal care brands were outshone by a temporary distraction from some of the company’s distributor and retail customers. A fall in grocery brands along with some of the natural brands also contributed to the US segment’s fall in performance. However, the company continues to benefit from its diversified business across branded organic and natural product categories, sales channels, and international segments.

Management’s view on outlook for 2016

The management is concerned with its US grocery business, as it’s the largest contributor to the US segment’s sales. The grocery business is still recovering from the nut-butter business and the comeback of some private label business that the company gave up last year. Many of Hain Celestial’s acquisitions also contributed to this segment. They managed a $4.7 million reduction in expenses even though the company is making acquisitions and seeing growth in sales. The company expects to gain from its recent acquisitions of Mona Group, Belvedere International, and EK Holdings in fiscal 2016. Also, the company continues to expect productivity savings of $60 million in 2016.

The company’s peers in the industry include Hershey (HSY), Cal-Maine Foods (CALM), and Mondelez International (MDLZ). Hershey reported YTD (year-to-date) returns of -18.1%, while Mondelez and Cal-Maine Foods reported positive YTD returns of 22.2% and 46.7%, respectively, as of November 9. The iShares S&P Global Consumer Staples ETF (KXI) and the PowerShares QQQ Trust (QQQ) invest 1.9% and 1.4%, respectively, of their portfolios in MDLZ stock.

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