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Why Hain Celestial Stock Has Fallen ~25% in 2018


Apr. 19 2018, Updated 4:00 p.m. ET

Stock price movement dismal

Organic and natural food manufacturer and marketer Hain Celestial’s (HAIN) stock price had fallen 24.7% year-to-date as of April 17, 2018. The company has been facing increasing costs and stiff competition.

Like Hain Celestial, most packaged food manufacturers are trading negatively. Peers Kellogg (K), Campbell Soup (CPB), and Conagra Brands (CAG) have fallen 6.2%, 11.6%, and 0.4%, respectively, this year. Packaged food manufacturers have been challenged by a tough retail landscape, commodity inflation, and rising transportation expenses.

In comparison, the S&P 500 has risen 1.2%, subdued as US-China trade war fears loom large. Moreover, the recent US-led attack on Syrian chemical weapon facilities has kept investors on edge. However, recent earnings results are supporting the benchmark index.

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Could Hain’s stock price rebound in 2018?

Hain Celestial has deployed several measures to put itself back on a growth trajectory. The company has streamlined 700 SKUs (stock keeping unit) and is now reviewing 500 more. The company has also undertaken an extensive cost-cutting plan, Project Terra, through which it aims to achieve $350 million in savings by fiscal 2020.

Also, the fast-growing market for organic foods and consumer preferences moving to online shopping spell opportunity for the company, and could drive its top line. Millennials, who are more health conscious, prefer organic food and are more conversant with online shopping.

There is widespread speculation that the company is divesting non-core operations to attract a suitable buyer. Activist fund Engaged Capital, which has an 11.3% stake in the company, has been pressing for strategic initiatives such as a sale to unlock shareholder value.

Hain Celestial is mulling over the divestment of its Hain Pure Protein business as it faces increased supply and distribution issues. In the next article, we’ll analyze the company’s sales trends and growth strategies.


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