- TreeHouse Foods reported a 98.7% net sales increase to $1.59 billion for the third quarter compared to the same period last year, according to the company's most recent earnings report Thursday.
- Despite that sales hike, revenue from private labels came in lower than TreeHouse expected. Between the company's third-quarter performance and anticipated fourth-quarter challenges, TreeHouse lowered its full-year expectations for adjusted per-share earnings to between $2.80 and $2.85, below prior estimates of $3.00 to $3.10.
- TreeHouse also announced changes to its executive team: CFO Dennis Riordan, who was expected to retire, will assume the role of interim president, as former president Christopher Sliva steps down for another career opportunity. Matthew Foulston, CFO of minerals producer Compass Minerals International Inc., will replace Riordan as TreeHouse's CFO.
This quarter's net sales boost accounts for TreeHouse's $2.7 billion acquisition of ConAgra's private label business, which the companies announced last November and completed in February. The deal made TreeHouse the largest U.S. private label retailer, with annual sales of the combined businesses estimated around $7 billion.
However, just as the private label business was a drain on ConAgra's profits, prompting the divestment, TreeHouse is now feeling its weight on its own profitability. Investors recognized these struggles, in addition to the potentially problematic executive shakeup, and shares plunged more than 20% Thursday. The exiting and soon-to-retire executives were both integral to the ConAgra deal, which could be foreboding for the future of the combined businesses.
The company also announced the closure of its Delta, British Columbia, plant, which will impact about 90 jobs, and the partial closure of its plant in Battle Creek, MI, which TreeHouse acquired from ConAgra earlier this year. That partial closure will lead to about 100 job cuts out of a total 160 positions at the plant.
But these results don't paint the full picture of the business overall. Chairman and CEO Sam K. Reed described the company's performance this past quarter as "a tale of two cities," he said in a statement. TreeHouse's core business remained strong, posting 4.6% growth in retail volume/mix.
Though private labels did grow sequentially, the newly acquired business segment still fell short of expectations. The private label market is under pressure from increased competition on product quality and price points, which has impacted sales and profitability.
Instead of focusing only on a seamless merger, Reed promised a turnaround for the segment via "a new go-to-market sales structure to better align and focus our sales teams to drive new and consistent growth," he said in a statement.