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Published June 10, 2015, 02:11 PM

Boulder Brands forecasts first quarterly sales fall in 4 years

Smart Balance spreads maker Boulder Brands Inc forecast a fall in current-quarter sales, the first quarterly decline in four years, and said co-founder and Chief Executive Stephen Hughes resigned.

By: Yashaswini Swamynathan, Reuters

Smart Balance spreads maker Boulder Brands Inc forecast a fall in current-quarter sales, the first quarterly decline in four years, and said co-founder and Chief Executive Stephen Hughes resigned.

The company's shares fell as much as 23 percent to a three-year low of $6.82.

Hughes, who co-founded the company 10 years ago, will be replaced by COO James Leighton on an interim basis, the company said on Wednesday.

Boulder said it expected sales growth in its Natural foods business, its biggest, to remain flat or grow up to 2 percent in the second quarter ending June.

Sales in the business, which sells Glutino and EVOL brands, slowed down to single-digit in the latest quarter after posting double-digit growth for six straight quarters.

The trend of gluten-free products seems to be settling down, Lake Street Capital Markets analyst Chris Krueger said.

Boulder has also been unable to stem falling sales in its Balance business, which includes the Smart Balance dairy-free buttery spreads. The company forecast a 16-19 percent fall in sales in the business for the second quarter.

The business contributed about 39 percent to total sales in 2014.

Boulder said it expected second-quarter sales to be $122 million-$124 million, a drop of 5-7 percent from a year earlier.

Analysts on average are expecting sales of $132.4 million, according to Thomson Reuters I/B/E/S.

Boulder makes an attractive acquisition target, Krueger said, adding the sum of its parts is more valuable than the whole business.

The company itself was incorporated as an acquisition vehicle for food companies in 2005.

"However, until Smart Balance's steep unit decline abates, we doubt that an acquirer would step up given the cash flow uncertainty," BB&T Capital Markets analyst Andrew Wolf wrote in a note.

On an adjusted per-share basis, Boulder expects to break even or report a profit of up to 2 cents in the second quarter. Analysts were expecting a profit of 4 cents per share.

Analysts also said the company will likely cut its full-year forecast.

Boulder currently expects 2015 sales to be $550 million-$560 million and adjusted earnings of 25-29 cents per share.

Leighton, who was named COO in 2013, previously worked with ConAgra Foods Inc and Perdue Foods, Boulder said.

Boulder separated the roles of chairman and CEO in March.

The company's shares were down 20 percent at $7.07 on the Nasdaq in afternoon trading.

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