Hain Celestial Registers 5% Top-Line Decline In Q2 Hit By Retailer Inventory Reductions

Hain Celestial Group Inc HAIN reported a second-quarter FY23 sales decline of 5% year-on-year to $454.21 million, missing the consensus of $460.31 million.
Net sales from North America increased 3% Y/Y. When adjusted for foreign exchange, acquisitions, divestitures and discontinued brands, net sales decreased by 2%, mainly due to retailer inventory adjustments, especially in tea, and lower sales in personal care, partially offset by higher sales in snacks.
International sales declined 15% due to continued softness in plant-based categories in Europe.
Adjusted gross margin for the quarter fell 170 basis points Y/Y to 22.9%. Operating margin was 6%, and the operating income for the quarter was $27.4 million.
On a constant currency basis, Adjusted EBITDA of $52.7 million decreased 11.1% Y/Y with an adjusted EBITDA margin decline of 144 basis points to 11%.
Adjusted EPS of $0.20 topped the consensus of $0.13.
The company held $43.4 million in cash and equivalents as of Dec. 31, 2022.
"While we experienced some retailer inventory reductions in North America that impacted our topline results, we continue to see strong momentum in key categories such as better-for-you snacks, baby, and yogurt. Additionally, while the European market remains somewhat uncertain, we see early indications of stabilization," said CFO Christopher J. Bellairs.
Outlook: Hain Celestial reaffirmed its FY23 adjusted net sales and adjusted EBITDA on a constant currency basis of -1% to +4% Y/Y.
Price Action: HAIN shares are trading lower by 2.08% at $20.70 on the last check Tuesday.

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