The Hain Celestial Group Inc., publicly traded under the ticker NASDAQ:HAIN, disclosed its fiscal second-quarter results, revealing a year-over-year drop in net sales of 7% to $384 million. This decline notably pressured the stock price, reflected in a significant market value decrease upon announcement.
Organic sales experienced a 7% reduction, primarily attributable to a 9-percentage-point contraction in volume and mix effects, which was partially mitigated by a 2-percentage-point uplift from pricing adjustments. The reported net loss widened to $116 million, equating to $1.28 per diluted share, compared with a net loss of $104 million or $1.15 per share recorded in the corresponding period last year.
On an adjusted basis, the net loss narrowed to $3 million, or 3 cents per share, yet this remained below analyst expectations which had projected a break-even outcome. The company's revenue slightly outperformed forecasts, registering $384.12 million against an estimated $383.28 million.
During this period, Hain Celestial undertook a significant portfolio realignment, divesting its North American snack business. This move forms part of a strategic initiative designed to simplify its brand portfolio, fortify its financial position, and enhance both margin profiles and cash flow generation.
Alison Lewis, the company’s President and CEO, addressed these developments: "We took bold steps to sharpen our portfolio and strengthen our balance sheet through the divestiture of our North American snack business, giving us greater financial flexibility alongside an improved margin and cash flow profile. Our core categories are stable, our operational execution is improving, and we demonstrated strong cash delivery in the quarter." She further emphasized confidence in the company’s strategy, stating, "The actions underway across simplification, pricing, innovation, and productivity provide a clear path to sequential improvement in the back half of the year. We remain confident in our path forward."
The company’s segment performance shows notable divergence between regions. In North America, organic sales contracted by 10%, a trend primarily driven by diminished demand in the snacks and baby formula categories. Gross margin in this segment stood at 20.6%, reflecting a decline of 420 basis points compared to the prior year, while adjusted gross margin followed suit with a 440-basis point decrease to 20.8%.
International sales decreased by 3% on an organic basis, mainly impacted by lower volumes in the baby and kids segment. Both gross margin and adjusted gross margin dropped by 200 basis points each to 18.1%, indicating downward pressure in profitability beyond North America.
Adjusted EBITDA declined to $24 million from $38 million observed in the second quarter of fiscal 2025, illustrating sustained margin pressure across all segments. Nevertheless, operating cash flow rose to $37 million from $31 million the previous year, with free cash flow also increasing, reaching $30 million compared to $25 million a year earlier.
The company's balance sheet remained stable through the quarter, with total debt levels unchanged at $705 million compared to the fiscal year's start. Net debt showed improvement, reducing to $637 million from $650 million.
Following these results, Hain Celestial's share price plummeted 20.33%, closing at $0.98 and marking a new 52-week low. Market data confirms this downward trajectory as the lowest point within the last year.
These results highlight ongoing challenges for Hain Celestial as it navigates volume declines and margin compression, even while taking strategic steps intended to stabilize and improve financial outcomes. The company’s outlook reflects commitments to portfolio optimization, pricing strategies, innovation, and productivity enhancements expected to contribute to sequential gains in the latter half of the fiscal year.