Analyst Note| Rebecca Scheuneman, CFA |
We think investors underestimate the degree of improvements to result from Hain Celestial’s turnaround, which has been underway since Mark Schiller took the helm in fiscal 2019 after a string of acquisitions left the firm with onerous complexity and a lack of focus. To date, the firm has undergone significant portfolio reshaping (it divested 20% of its sales base) and overhauled its marketing and innovation practices, leading to improved sales trends (excluding product discontinuations) and a 440-basis-point improvement in operating margins. Over the long term, we think Hain will enjoy 7% organic sales growth (in line with category growth), and 15% operating margins, driven by $200 million in cost savings we expect by fiscal 2025. This is above the 5% growth and 13% operating margins implied in current FactSet consensus.