What happened
Shares of TreeHouse Foods, Inc. (THS 1.71%) took a dive last month after the company posted a weak earnings report and lowered its guidance for the year. The packaged-food maker also said it would shut down two facilities, and announced a restructuring plan.
Unsurprisingly, that news lopped 12% off the stock after the earnings report came out, and the stock continued to slide over the duration of the month, dropping 21%, according to data from S&P Global Market Intelligence.
So what
It was an all-around stinker of a report for TreeHouse as revenue dipped 1.2% to $1.52 billion due to the previous sale of its soup and infant feeding business. That result missed the consensus at $1.54 billion. On the bottom line, adjusted earnings per share fell from $0.60 to $0.51, however, that actually beat estimates at $0.49.
Still, CEO Sam Reed acknowledged that the company's recover had been "slower than we originally anticipated," citing, "adverse market conditions, pricing lag from commodity cost increases and operating inefficiencies."
Image source: Getty Images.
The news that the company would close two facilities and lay off about 400 employees also weighed on the stock. The move will result in a one-time charge of $44.5 million.
Now what
Finally, the company lowered its outlook as Reed noted, "The environment remains highly competitive, which is pressuring volumes across nearly all of our divisions." As a result, TreeHouse is now calling for adjusted EPS of $3.15 to $3.30, down from a previous range of $3.50 to $3.70.
TreeHouse has a history of having wild swings after earnings reports so investors shouldn't be surprised by the sell-off. However, with sales and earnings heading south, I wouldn't expect a turnaround so soon.
