- Hain Celestial's shares plunged as much as 27.5% in premarket trading Tuesday. The company announced late Monday that it was postponing the release of its fourth quarter and fiscal 2016 earnings results and its annual report on Form 10-K for the fiscal year ended June 30.
- Hain said it identified concessions the company granted to certain U.S. distributors and is now determining whether it accounted for the revenue associated with those concessions in the correct time period. The company is also reviewing internal controls over financial reporting.
- Hain also said it does not expect to reach its previously announced sales or profit guidance for the fiscal year.
This is a major turn of events for Hain, which up until Monday's afternoon announcement was a focal point of industry takeover speculation. Hain's stock soared after Danone announced it would acquire WhiteWave, a key competitor for Hain in the natural and organic space. Analysts believed Hain would be the next big purchase as the industry continues to consolidate.
Now some analysts are changing their stances and dropping their theses that Hain is still an acquisition target. While Hain's status is questionable, it could be premature to discredit Hain's potential takeover entirely. Before the board's audit committee completes its investigation, it's impossible to know just how much these accounting discrepancies could impact Hain's total revenue for the year.
Hain's revenue would have to fall significantly due for it to be on par with the declines other major manufacturers have reported recently. That includes manufacturers that could purchase Hain, such as General Mills, which reported a 6% decline in net sales for the past fiscal year.
Hain posted a 13% increase in fiscal third-quarter sales, returning to double-digit sales growth increases. Previously, two quarters with high single-digit sales increases had broken a 20-quarter streak of double-digit sales growth. Hain had already lowered its expectations for the fiscal year in January.
The company now has to sort out its financial reporting and any errors that could influence those revenue numbers. But whether those discrepancies will be enough to shake the confidence that Hain has a strong portfolio rooted in the fast-growing natural and organic sectors is less likely. It may take longer for a takeover to occur as the dust settles around this most recent announcement, but Hain is still positioned for growth in categories that align with consumers' preferences.