BOULDER, COLO. — Boulder Brands, Inc. said it may sell some of its brands, including Level Life Foods, as part of a comprehensive optimization of its portfolio. For the second quarter ended June 30, the company posted a net loss of $3,635,000, which compared with net income of $2,736,000, or 5c per share on the common stock, for the prior-year period. During the quarter, the company recorded an impairment charge of $2.7 million for Level. Net sales declined more than 10% to $117,717,000 from $131,348,000 the year before.
Level’s portfolio includes nutrition bars, protein shakes, glucose gels and sweet snacks developed for diabetics. Boulder acquired the brand two years ago. In addition to exploring strategic options for the brand, Boulder said it plans to discontinue products later this year and pull out of nonstrategic channels, such as export.
|Jim Leighton, interim c.e.o. and c.o.o. of Boulder Brands.|
“Optimizing our product, brands, and channels will result in us being more efficient with our product mix, more efficient with our brands, but knowing broader work on this will take some time and focusing on fewer channels so our marketing activation is more effective,” said Jim Leighton, interim chief executive officer and chief operating officer, during an Aug. 6 earnings call with financial analysts. “Our portfolio optimization process has already identified a number of products requiring renovation to improve related gross margins.”
The company also is focused on reducing its cost structure, which included a reduction in headcount by approximately 50% in July. Other actions will include outsourcing frozen manufacturing to co-packers, increasing efficiency in plants and optimizing the supply chain.
“We have also identified additional cost savings initiatives so we can generate savings to reinvest in our brands,” Mr. Leighton said. “We have already taken some important initial steps to address our near-term issues and we have additional action items in place to continue to drive change that we will expect to support sustainable, profitable, long-term growth.”
Net sales for Boulder’s Natural segment, which includes Evol, Udi’s and Glutino brands, fell 1.9% to $78.6 million. Evol net sales advanced nearly 8%, lapping strong distribution gains in the prior-quarter, as net sales for Udi’s and Glutino grew nearly 5% and declined 19%, respectively. Gross profit for the segment declined 7% to $21.7 million.
Net sales for the company’s Balance segment, which includes Earth Balance, Smart Balance and Level, fell 24% to $39.1 million for the quarter. Excluding the Level adjustment, net sales decreased 21% to $40.8 million. Earth Balance sales increased nearly 10% over the year-ago quarter. Gross profit fell 21% to $18.7 million.
For the first six months of the fiscal year, Boulder Brands posted a net loss of $1,818,000, which compared with net income of $3,148,000 the year before. Net sales were $246,717,000, down from $254,200,000.The company has updated its fiscal 2015 outlook for earnings per share to 20c to 25c.