Can TreeHouse Foods Overcome Operational and Market Disruptions?

TreeHouse Foods, Inc. THS is navigating a challenging period marked by weak consumer demand. Operational challenges and market disruptions are further hindering the company’s performance. As a result, THS’ third-quarter fiscal 2024 net sales declined year over year and missed the Zacks Consensus Estimate.Management lowered its fiscal 2024 outlook, citing softer consumer demand and the ongoing impact of the product recall, signaling that the road ahead may be even more difficult. Over the past three months, the company’s stock dropped 11.8%, a sharper decline compared to the 7.7% drop in the industry.Slowing Consumer Trends Hurt TreeHouse FoodsThe company has been operating amid a dynamic environment characterized by challenging consumer trends, slower category growth and operational disruptions. These factors persisted in the fiscal third quarter, wherein quarterly net sales of $839.1 million dropped 2.8% due to a voluntary recall of frozen griddle products and unfavorable volume/mix performance. Organic sales decreased 2.7%, with softness driven by slowing consumer consumption trends across key categories.Although private brand unit sales were positive during fiscal third quarter, there was a notable deceleration as the quarter progressed. This reflects sustained consumer pressure and broad market challenges. The softness persisted into October, with expectations for these trends to continue in the near term. A shrinking market for private brands, despite their historical growth trajectory, raises concerns about TreeHouse Foods’ ability to sustain revenue growth.Image Source: Zacks Investment ResearchTHS’ Updated Guidance Reflects Continued PressureThanks to softer consumer demand and a voluntary recall of frozen griddle products, TreeHouse Foods recently lowered its fiscal 2024 adjusted net sales and adjusted EBITDA guidance. Management expects full-year adjusted net sales of $3.37-$3.4 billion, which indicates a decline of 2% to 1% from the reported level in 2023. This forecast is revised from the previous guidance of $3.43-$3.5 billion, implying a flat to a 2% increase. Adjusted net sales for the fiscal fourth quarter are projected between $900 million and $930 million, indicating a decline of 2% to 1% year over year.The company revised its fiscal 2024 adjusted EBITDA guidance downward in the range of $335-$345 million compared with $360-$380 million projected earlier. This revision implies weakening consumption trends and a softer mix, leading to supply chain deleverage, along with the anticipated impact of the voluntary griddle recall.A Rocky Road Ahead for THSThe company is working on improving its operations through the TreeHouse management operating system and other supply-chain initiatives. However, ongoing market challenges and internal disruptions suggest continued volatility. With weak consumer demand and a disappointing outlook, investors should approach TreeHouse Foods with caution in the near term. At present, THS carries a Zacks Rank #5 (Strong Sell).Some Solid Staple BetsWe have highlighted three better-ranked stocks from the Consumer Staples sector, namely United Natural Foods, Inc. UNFI, Ingredion Incorporated INGR and Freshpet FRPT.United Natural currently sports a Zacks Rank of 1 (Strong Buy). UNFI delivered a trailing four-quarter earnings surprise of 553.1%, on average.You can see the complete list of today’s Zacks #1 Rank stocks here.The consensus estimate for United Natural’s current financial-year sales and earnings suggests growth of 0.3% and 442.9%, respectively, from the year-ago period’s reported figure.Ingredion Incorporated manufactures and sells sweeteners, starches, nutrition ingredients and biomaterial solutions derived from wet milling and processing corn and other starch-based materials. The company currently carries a Zacks Rank #2 (Buy).INGR has a trailing four-quarter earnings surprise of 9.5%, on average. The Zacks Consensus Estimate for Ingredion’s current financial year’s earnings indicates growth of 12.4% from the year-ago reported number.Freshpet, a pet food company, presently carries a Zacks Rank #2. FRPT has a trailing four-quarter earnings surprise of 144.5%, on average.The Zacks Consensus Estimate for Freshpet’s current financial-year sales and earnings suggests growth of 27.2% and 228.6%, respectively, from the year-ago period’s reported figure.Just Released: Zacks Top 10 Stocks for 2024Hurry – you can still get in early on our 10 top tickers for 2025. Handpicked by Zacks Director of Research Sheraz Mian, this portfolio has been stunningly and consistently successful. From inception in 2012 through November, 2024, the Zacks Top 10 Stocks gained +2,112.6%, more than QUADRUPLING the S&P 500’s +475.6%. Sheraz has combed through 4,400 companies covered by the Zacks Rank and handpicked the best 10 to buy and hold in 2025. You can still be among the first to see these just-released stocks with enormous potential. See New Top 10 Stocks >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Freshpet, Inc. (FRPT): Free Stock Analysis Report United Natural Foods, Inc. (UNFI): Free Stock Analysis Report TreeHouse Foods, Inc. (THS): Free Stock Analysis Report Ingredion Incorporated (INGR): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks