Nov. 5, 2009 (PR Newswire) --

MELVILLE, N.Y., Nov. 5 /PRNewswire-FirstCall/ -- The Hain Celestial Group, Inc. (Nasdaq: HAIN), a leading natural and organic products company providing consumers with A Healthy Way of Life(TM), today reported results for the first quarter ended September 30, 2009. The Company reported that earnings per share grew 17.6% to $0.20 per share on net income of $8.1 million as compared to the prior year quarter earnings of $0.17 per share on net income of $7.0 million, on the strength of profit contributions from the Company's United States and Continental European operations. These results are after the Company absorbed charges of $1.8 million, or $0.03 per share, for the planned and previously disclosed consolidation of its two United Kingdom-based fresh food-to-go production facilities, and a $1.0 million, or $0.02 per share, net loss representing the Company's minority interest in the quarterly results of Hain Pure Protein ("HPP").

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Sales for the first quarter this year totaled $230.5 million versus $248.4 million in the prior year first quarter, after deducting $38.4 million of sales for HPP. Total sales in the prior year quarter amounted to $286.8 million including HPP, which was then a consolidated subsidiary. Sales in the current year first quarter were impacted by increased promotional spending activity and, the Company believes, would have otherwise increased over last year's quarter with the comparison unfavorably affected by a total of approximately $22 million from destocking at a major distributor, the Celestial Seasonings® SKU rationalization, reductions of personal care product sales into the chain drug channel, the phasing out of the supply of fresh sandwiches to a major retail customer in the United Kingdom and changes in foreign currencies.

Sales for the first quarter this year totaled $230.5 million versus $248.4 million in the prior year first quarter, after deducting $38.4 million of sales for HPP, a consolidated subsidiary in last year's quarter. Sales in the current year first quarter were impacted by increased promotional spending activity and, the Company believes, would have otherwise been in line with last year's quarter with the comparison unfavorably affected by a total of approximately $56 million, consisting of: the deconsolidation of $38.4 million from HPP, plus a total of $17.6 million from distributor and retailer destocking, the Celestial Seasonings® SKU rationalization, reductions of personal care products sales into the chain drug channel, the phasing out of the supply of fresh sandwiches to a major retail customer in the United Kingdom and changes in foreign currencies.

"Last year at this time we were experiencing strong sales in our first quarter, which began to moderate in the second quarter. In the current economic climate we are encouraged by signs of momentum in the United States, Canada and selected parts of Europe. This year we continue to see expanded distribution from new channels even as certain customers have reduced their inventory levels in the quarter," said Irwin D. Simon, President and Chief Executive Officer. "The Company realized more favorable fuel and commodity input pricing, cost containment and productivity initiatives. We believe the Company will continue to benefit from such initiatives and from new customers at our Fakenham facility, where we have seen expansion of both the Linda McCartney® brand and private label sales in the United Kingdom."

"In the United Kingdom, where we continue to focus on improving our sales and operating performance, we have consolidated into fewer production locations. We have moved production of Daily Bread(TM) products into our Luton facility. This consolidation has gone well and is now substantially complete, although additional consolidation costs will impact our second quarter. We continue to produce our frozen meat-free offerings at our Fakenham facility and our non-dairy beverage products at our Manchester facility," Mr. Simon said. "In addition, we absorbed a net loss from our minority interest in HPP amounting to $1.0 million in the quarter, which arose principally from sales of existing inventory of commodity products at lower than anticipated prices. We are encouraged by the progress HPP is making in moving away from commodity poultry products and concentrating on antibiotic-free products. We look forward to a return to profitable results at HPP during the remainder of the fiscal year."

Gross margins in this year's first quarter were 26.8% compared to 24.0% in the prior year quarter. The 280 basis point increase in gross margin is reflective of the deconsolidation of HPP offset by increased promotional spending. The Company anticipates higher margin performance in the coming quarters of the fiscal year.

Selling, general and administrative expenses were 18.5% as a percentage of sales in this year's first quarter compared to 18.6% in the prior year quarter. The deconsolidation of HPP, which operates at a lower expense base, affected the comparison of selling, general and administrative expenses as a percentage of sales by 183 basis points. This increase was offset by reductions in spending resulting from the Company's focus on cost control, including the benefit of actions taken in reducing headcount and consolidating locations.

"As stated when we reported our year-end results in late August, we expect to see a stronger second half of fiscal year 2010.