Treehouse shares tank after lower guidance, to close facilities

Tim Boyle | Bloomberg | Getty Images

Sam Reed, chief executive officer of TreeHouse Foods Inc.

TreeHouse Foods shares fell nearly 12 percent after the company said it would restructure its operations, closing two facilities and partially closing another, amid a weaker outlook.

TreeHouse’s plan will shutter facilities in Minnesota and Indiana and downsize one in Alabama. The move will result 375 job cuts and cost the company around $44.5 million, according to a press release.

The Illinois-based private label food and beverage company employs more than 16,000 employees, according to its website.

“The decisions to close these facilities are difficult ones given their impact on families and communities,” CEO Sam K. Reed said in a statement. “However, despite the toll they exact, these measures are required if we are to remain competitive in a rapidly changing marketplace for packaged foods.”

Changing consumer preferences have challenged the whole packaged foods industry. Customers are increasingly looking to eat healthier. That has pushed them toward the perimeter of the grocery store and away from the center of the store, where packaged foods typically are.

TreeHouse has been a Wall Street darling. Analysts were recommending investors buy the company’s stock, driving shares up nearly 17 percent in the year-to-date period.

That changed Thursday, with the stock closing down nearly 11 percent.

TreeHouse stock loses most of the year’s gains Thursday

Source: FactSet

TreeHouse narrowly beat Wall Street’s second-earnings expectations, though its revenue fell slightly short. Overall sales fell 1.2 percent from the same time last year. The company’s baked goods, beverage and condiment sales increased. Its meals and snack sales decreased.

TreeHouse also lowered its forecast for the rest of the year, citing fierce industry competition. The company is now estimating sales will be between $6.2 billion and $6.3 billion.