(Bloomberg) -- The bankruptcy of the world’s largest toy retailer isn’t just causing headaches for toy companies: Organic food producer Hain Celestial Inc. is also feeling some pain.
Hain, known for selling tea and snacks, included $897,000 of “bad debt” from Toys “R” Us as part of its adjusted profit numbers in its latest quarterly results, which were released early Tuesday. The company said the line item was tied to organic baby formula at Babies “R” Us, which it called a “major customer.”
The bad debt was another hit for the company, which lowered its guidance and missed profit estimates amid higher freight and commodity costs and a larger marketing budget. The shares plunged as much as 9.9 percent -- the most since February 2017, when it disclosed an SEC accounting probe.
The company said last June that the investigation wouldn’t cause any material changes to its results, and speculation has swirled since then that Hain Celestial would be an acquisition target. A week later, activist firm Engaged Capital disclosed a 9.9 percent stake in the business and said it would push for board changes and possibly a sale.
However, the company has struggled as other food companies catch up with the growing demand for products that are organic or perceived as having more natural ingredients. The shares fell to as low as $25.80 on Tuesday. Hain Celestial stock had already lost almost a third of its value this year through Monday’s close.
Excluding some items, profit was 37 cents a share in the quarter ended March 31. That’s 10 cents below the average estimate of 47 cents from analysts. Hain Celestial also changed its guidance to reflect increased freight and commodity costs and to exclude its Pure Protein business, which the company is looking to divest.
©2018 Bloomberg L.P.