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On Feb. 4, 2009,
Hain Celestial Group
, a natural and organic food producer, reported a 47.8% decline in its Q2 FY09 earnings on higher expenses. Net income slipped to $8.14 million or $0.20 per share from $15.58 million or $0.37 per share in the prior year's quarter. Inventory reductions, grain costs at Hain Pure Protein and the lag in fully realizing the August price increase impacted earnings by $0.11 per share. Non-GAAP earnings dropped 16.9% to $14.89 million or $0.36 per share, which missed the consensus estimate of $0.44 per share.
HAIN's revenue increased 14.2% year-over-year due to strong performance of its brands in various distribution channels. Net sales climbed to $315.56 million from $276.23 million a year ago. Moreover, gross margin narrowed 529 basis points to 23.36% from 28.65% in the year-ago quarter, as the cost of sales spiked 22.7% to $241.84 million. Selling, general, and administrative expenses were up 8.7% to $54.21 million. Consequently, operating margin deteriorated 441 basis points to 6.18% from 10.59%.
For the quarter ended December 2008, the company's interest expense climbed to $6.28 million from $4.31 million a year earlier, led by the cost of higher borrowings resulting from acquisitions made during the prior year. Recently, the company signed a license agreement with Martha Stewart Living Omnimedia Inc. to offer a new Martha Stewart-branded line of natural home cleaning solutions.
Looking ahead, HAIN lowered its FY09 earnings guidance to a range of $1.38 per share to $1.42 per share, based on anticipated revenue of $1.18 billion to $1.20 billion. The company expects to incur $0.08 per share in stock compensation expense to amortize equity grants made in FY08.
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