Hain Celestial improves margins in Q4 2024, ‘well positioned’ for growth in FY 2025

“We are well positioned as we head into fiscal year 2025 to pivot to growth, building upon this solid foundation and momentum, we are pivoting our focus to stronger commercial execution to deliver top- and bottom-line growth. In fiscal [year 2025], we remain committed to the Hain Reimagined algorithm we outlined last year​. So, we are now using fiscal [year 2024] as the base for our organic net sales growth. We are confident in the strength of our diversified portfolio and geographic footprint, the benefits of scale in our operating model, and our ability to deliver sustainable growth,” Wendy Davidson, company CEO and president, shared yesterday during an earnings call.

Beverages and meal prep grow, divestitures impact snack business​

Hain Celestial's meal-prep business — including New Covent Garden, Yves Veggie Cuisine, Spectrum, Imagine, Linda McCartney's and others — achieved $665 million in net sales, growing by 1% year-over-year, for the fiscal year, ending June 30. Additionally, net sales for its beverage business came in at $253 million, growing 6% year-over-year.

Hain Celestial’s snacks business declined 5% in 2024 to $463 million in sales. The divesture of cookie brand Thinsters, product discontinuation and exits accounted for 3% out of the 5% drop in sales growth in the snack category.

At the time of the divestiture, Davidson told FoodNavigator-USA​ that the sale was part of Hain Reimagined’s first pillar, focus.

She elaborated, “As we looked at the snacking portfolio, Thinsters as a brand — and certainly the category of cookies — really did not fit into our better-for-you-snacking portfolio for us to take forward. So, we found a great home with J&J. The brand is actually a great fit for their portfolio around sweet snacking ... and it allows us to then focus our team's efforts around driving growth from our core.”

‘The foundational work we did this year ... is already making a difference’​

Despite the better-than-expected financial results, growth in Hain Celestial’s "grow" and "maintain" brands was offset by declines in other brands, Davidson said. Hain Celestial's grow and maintain brands are considered vital to CPG company's Hain Reimagined framework.

Hain Celestial identifies its grow brands as Garden Veggie Snacks, Celestial Seasonings, Ella's Kitchen, Garden of Eatin', Terra and Earth's Best, while a selection of 13 brands, including The Greek Gods, New Covent Garden, Imagine, Yorkshire Provender and others make up Hain Celestial’s maintain cohort.

Double-digit declines in Hain’s plant-based Linda McCartney food brand in the UK partially offset growth in the company’s “grow” and “maintain” brands.

In response, Davidson said, “we made portfolio changes, exiting the refrigerated segment and rightsizing our operations capacity to address the softer market and improve our overall competitiveness as the category consolidates in the UK.”

She also noted that 60% of the Linda McCartney food brand portfolio is gaining or holding share.

Likewise, “within plant-based meat free, the Yves brand in Canada continues to outperform the category and gain share despite significant category headwinds and some supply service challenges in the back half of the year during our plant consolidation.”

Both Linda McCartney and Yves were categorized as “stabilize” brands when Hain Celestial first announced its Hain Reimagined initiative last fall.

"While the growth pillar did not progress as much as expected in fiscal year [2024], the 85% of the business comprised of our grow-and-maintain brands did grow in fiscal year [2024], with organic net sales of 3%. Double-digit declines in the 15% of the business targeted for stabilization more than offset that growth," Davidson said.

She added, "However, the foundational work we did this year, including portfolio shaping, placing new leaders in key positions and customer and channel prioritization is already making a difference with new distribution and shelf assortment. These changes have positioned as well to deliver sustainable growth going forward as we shift our focus to accelerated commercial execution.”

E-commerce, away-from-home ‘to be meaningful drivers of growth’ in FY 2025​

Looking ahead, Hain Celestial expects "e-commerce and away-from-home to be meaningful drivers of growth in fiscal year [2025] and beyond," following recent successes in convenience stores (c-stores) and online sales, Davidson noted.

Garden Veggie Snacks and Terra chips “saw strong growth in c-stores with Garden Veggie Snacks dollar sales up 49% and Terra up 48% this year,” while Earth’s Best achieved “double-digit growth in snacks and pouches” and Garden Veggie Snacks grew by low-single digits across ecommerce channels, Davidson said.

She added, “In fiscal 2024, away-from-home revenues grew low double digits in both North America and international, as we grew our c-store count by 42% in the US, expanded our route to market with distribution partners and expanded food service in both North America and international.”

Unpacking Q4, full-year results: Losses narrow, gross profit margin increases​

While the company's e-commerce and c-store channels are growing, Hain Celestial's net sales declined both on a quarterly and yearly basis, though net losses and gross profit margin increased on a quarterly basis.

For the fourth quarter, Hain Celestial's net sales were $419 million, declining 6% year-over-year. Similarly, organic net sales decreased 4% from the prior year quarter. However, gross profit margin increased 90-basis points in Q4 2023 to 23.4%, and net loss was $3 million compared to $19 million for the same period a year ago.

For the year, Hain Celestial saw $1.73 billion in net sales, decreasing 3% year-over-year, and organic net sales similarly decreased 2% compared to the previous year. Gross profit decreased 10-basis points to 21.9%, and net loss shrunk to $75 million for fiscal year 2024, compared to $117 million for the prior year.

The company expects organic net sales growth in fiscal year 2025 to be flat or better, gross margin is expected to grow by at least 125 basis points, and free cash flow is expected to reach at least $60 million, per 2025 company guidance.

Hain Celestial’s stock increased to about 18.5% to $8.10 per share at the closing bell on Aug. 27 compared to the previous day.