The Hain Celestial (NASDAQ:HAIN) Group, Inc.’s HAIN transformational efforts bode well. With respect to the transformation strategy, the company recently announced divestiture of the Danival brand to Europe-based Wessanen N.V.’s subsidiary. However, details of the transaction remained under covers. The Danival brand, which formed part of Hain Celestial’s Europe operating segment, consists of organic-cooked vegetables, sauces, fruit spreads, prepared meals and desserts.
The latest divestiture further simplifies the company’s brand portfolio. The company had also sold its Europe's Best and Casbah brands in March 2020. While management sold the Arrowhead Mills and SunSpire brands in October 2019, the entities consisting of the Tilda operating segment and some other assets of the Tilda business were divested in August. In fiscal 2019, Hain Celestial had divested its entire Hain Pure Protein operations and WestSoy tofu, seitan and tempeh businesses across the United States.
Through these strategic divestitures, Hain Celestial focuses on simplifying its portfolio and reinvigorating sales growth via discontinuing uneconomic investments, realigning resources, minimizing unproductive stock-keeping units (“SKUs”) and brands. The company is on track to simplify its business in a bid to focus on areas with higher growth potential, such as core packaged-foods business.
Management expects capitalizing on “Get Bigger” brands by reallocating resources, and increasing marketing and innovation investments for the same. The “Get Bigger” brands are the strongest brands with greater margins.
Clearly, this Zacks Rank #3 (Hold) company is progressing well with its transformation strategy to deliver sustainable profits. The transformation strategy is aimed at simplifying portfolio, identifying additional areas of productivity savings, enhancing margins and improving cash flow. Since the onset of the transformation strategy, the company has divested loss-making brands of almost $750 million in fiscal 2019.
Impressively, the natural and organic foods company’s shares have appreciated 62.9% in a year, compared with its industry’s gain of mere 1%.
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