Hain Celestial Fiscal Q1: More Price Bumps to Come as High Input Costs Continue
Two months after the company increased prices 6% to 10% across its product portfolio, Hain Celestial president and CEO Mark Schiller warned of additional price hikes to come during its first quarter fiscal 2021 earnings call yesterday.
Schiller said the company will raise prices in the coming quarter to offset the $20 million to $25 million in additional costs that Hain Celestial has accrued this fiscal year, driven by inflation on crops and transportation that has “continued to skyrocket…more than we initially anticipated.” The announcement comes after the company upped prices across its portfolio by 6% to 10% in North America in September, though elasticities have been low with little impact on volume, Schiller noted.
While the company faced “severe” labor shortages in Q2, in the following quarter it was able to fill two-thirds of open positions, Schiller said.
“We’ve done it through increased wages. We’ve done it through better benefits. We’ve done it through the incentive pay, and other things to make sure that we’re the preferred manufacturer in town,” Schiller said.
Net sales for the quarter decreased 9% year-over-year to $454.9 million due to overlap from last year’s COVID-related shopping surge. When adjusted for divestitures and brand discontinuations, net sales were flat, Schiller noted. North American net sales were down 5% to $265.5 million, while international sales dipped 13% to $189.4 million year-over-year.
Sales for its “growth brands” — which collectively account for 70% of its North American sales and 75% of total company profit — were up 1% year-over-year and 10% over the last two years. The segment is divided into “turbocharged brands” (meat-free, non-dairy beverage and snack brands) and “investment brands” (tea, baby, yogurt and personal care). The former group saw 9% growth year-over-year, driven by its snacks business, while the targeted investment portfolio also saw mid-to-high single digit growth, with tea up 20% over two years. According to Schiller, 6.5% of overall sales for the quarter came from new products, an increase of 3.5% year-over-year, with new products seeing high repeat rates.
Due to higher than expected inflation, for the full fiscal year 2022, CFO Javier Idrovo said the company is expecting low single-digit net sales declines in the first half of the year followed by mid to high single-digit growth in the second half, leading to low single-digit adjusted net sales growth for the year.
“We continue to leverage our nimble and scrapping culture to find creative solutions for disruptions in our supply chain,” Schiller said. “We’re excited by our momentum and confident that we have the right brands and strategies to accelerate top-line growth from here and create a company that consistently delivers high growth on both the top and bottom line.”
