Hain Ousts CEO, Initiates Strategic Review

For the second time in two years, Hain Celestial is once again changing its leadership team and initiating a strategic portfolio review after reporting Q3 net sales dropped 11% year-over-year to $390 million, driven by declines across all key segments with the exception of meal preparation.

The company appointed Alison Lewis as interim president and CEO, replacing Wendy Davidson, effective today. Lewis has served as an independent director on the company’s board since September 2024 and was previously CMO at Johnson & Johnson in addition to spending over 11 years at Coca-Cola, leading the Odwalla business and later serving as SVP and CMO of North America.

Following Davidson’s appointment in 2022, Hain later implemented its Hain Reimagined transformation plan; however, analysts and shareholders were hesitant about the latest turnaround effort, which also leans heavily on past initiatives to streamline operations and simplify the portfolio. Ken Goldman of JP Morgan asked executive leadership during the Q&A portion of the call “what’s different this time… we’ve heard all of it before a few times.”

Lewis, acknowledging that it is her first day on the job, offered little specificity into the new transformation effort. She instead pointed to the understanding she has derived from past experiences on “what makes the machine tick,” including a digital-first strategy, great innovation, strong revenue growth management and superior P&L management against margin accretion, with an added emphasis on gross margin and EBITDA.

“There are things that can be done differently and will be done differently as we move forward,” added Dawn Zier, chair of the board. Per, the company’s Q3 results today, there is plenty of room for improvement, particularly across its North American business.

Third quarter organic net sales declined 10% year-over-year across its North American business, contributing 80% of the “top line shortfall,” said CFO Lee Boyce on the call. Two-thirds of that decline stemmed from softness in its snack segment, Boyce added, which saw organic net sales decline of 13% year-over-year, primarily due to poor execution of Garden Veggie’s promotional strategy.

SKU rationalization, softness across its pouch business and smaller velocities across its Earth’s Best formula business contributed to a 6% organic net sales drop in Q3 year-over-year. Beverage segment organic net sales fell 7% year-over-year due to channel shifts in Europe for its non-dairy milk offerings and poor execution against its Celestial Seasonings business at the start of “hot tea season;” the brand pulled double digit velocities, but sales volume growth was offset by a temporary stocking issue at the beginning of the quarter.

The lower-than-expected results were also driven by a shortfall in pricing actions not keeping pace with the impact of trade, investment and cost inflation. Hain is preparing for the impact of tariffs by rebuilding inventory, reallocating resources and shifting some manufacturing and R&D activities but, overall, doesn’t expect impending tariffs to have a material impact.

“Most of our products are produced and sold in the same region, making us less subject to tariff impact on finished goods and cross border shipping,” Boyce said. “We have some exposure on raw materials that cannot be grown or sourced in the U.S.; however, based on what we know today, we do not expect any material cost impact in fiscal 2025 and we are actively working to mitigate any impact going forward.”

Meal preparation segment sales provided a small bright spot within Hain’s Q3 results, with organic net sales up 1% due to strength in its branded U.K. soup business and growth in U.S. yogurt.

As Hain works to improve its top line, Boyce outlined five key levers it will pull on: “simplifying our business and reducing overhead spending; accelerating renovation and innovation in our brand; implementing strategic revenue growth, management and pricing actions; driving operational productivity and working capital reduction; and finally, strengthening our digital capabilities.”

The company has already made advancements to shift and simplify distribution networks, as well as consolidating its corporate office footprint between Canada and the U.K., Boyce explained. Additionally, Hain has simplified its strategic partner network, reducing co-manufacturing partnerships by 23% and raw material and packaging vendor relationships by 13%. Further cost structure optimization efforts are expected to contribute $25 million in run rate cost savings by the second half of FY26, the company said.

“I’ve spent my career building and scaling consumer brands, and I believe Hain has many of the right ingredients to succeed… that being said we also need to be realistic about where we are today,” Lewis said. “Our third quarter results were disappointing and fell short of our expectations. We are not where we need to be, and we cannot afford to stand still. To that end, we are taking a hard look at our strategic plan to leverage what is working and address the areas in which we need to make changes.”