Horizon Organic Shifts Top Management
Published: Wednesday, December 01, 1999
The company’s stock tumbled almost 28%, to under $7/share, on Oct. 28 in the wake of 3Q99 earnings results that missed analysts’ estimates by one cent. HCOW’s stock has been on a slow but uneven uptick since then, closing on Nov. 24 at $8.50/share.
Horizon reported income of $761,000 or $.08/share for the quarter ending Sept. 30, compared to income of $108,000 or $.01/share for the same period in 1998. Analysts expected $.09/share.
The company’s revenues for 3Q99 increased 73% to a record $22.8 million from $12.8 million for 3Q98. Sales, however, were less than expected, primarily due to competition from extended-shelf-life refrigerated (UHT) and private-label organic milk, says Horizon’s CEO and President Barney Feinblum. Horizon now offers UHT and is discussing private labeling with some grocery chains.
Industry analysts were not forgiving. One month ago three analysts ranked Horizon at Strong Buy and three as a Moderate Buy, according to Multex Broker Research. Since the earnings report, the tally is one Strong Buy, three Moderate Buys and two Holds.
“It’s not so much about missing by one cent, it’s about projections and lowering earnings estimates,” says Ashley Ragsdale, an analyst with Bear Stearns, which downgraded Horizon from Buy to Neutral.
“They are investing in infrastructure, and that is going to inhibit earnings,” Ragsdale says.
This year Horizon launched a line of organic juices and acquired Rachel’s Dairy in Aberystwyth, Wales, and The Organic Cow of Vermont dairy products brand.
“You can’t launch new products and grow without investing,” says Chuck Marcy, who on Nov. 17 was named to the newly created position of president and COO for Horizon. The company plans to hand over Feinblum’s CEO reigns to Marcy in spring 2000. Feinblum will remain on HCOW’s board
of directors but will step away from his
management responsibilities.
Marcy is the former president and CEO of Sealright Corp., a manufacturer of dairy packaging and packaging systems in Kansas City, MO. He also was president of Golden Grain Co., a subsidiary of Quaker Oats Co. (OAT), president of the dairy division of Kraft General Foods (GIS), and held senior marketing and strategic planning roles with Sara Lee (SLE) and General Foods.
Horizon also announced that co-founder and Senior VP of Corporate Development Mark Retzloff will become president, international.
Co-founder and Senior VP of Marketing Paul Repetto has already announced that he will retire at the end of 1999. Repetto will remain on the board and will oversee the development of the company’s organic dairy educational center and working farm that will open in fall 2000 in Annapolis, MD.