Landec is exploring options for its “legacy vegetable bag and tray business” within the US-based health and wellness firm’s Curation Foods operation, including a potential sale.
Curation Foods was formerly trading as Apio before Landec changed the name last year to reflect a transition away from a packaged vegetable company to a branded, natural foods group, including plant-based product offerings. And a transformation programme – Project Swift – was also launched to return the business to profit.
In January, the company revealed its fiance chief Gregory Skinner was set to leave, with Curations Foods’ CFO Brian McLaughlin to step into the role on an interim basis.
Dr. Albert Bolles, Landec’s president and chief executive, said in a statement yesterday (27 February): “This step is part of the next phase of our previously announced shareholder value creation programme, Project Swift, which is designed to turn around Curation Foods and transform it into an agile, competitive company. During this transformation, we will remain fully committed to providing our customers, grower partners and consumers with the highest level of service and continuity.”
Landec said Curation Foods’ vegetable bag and tray business, which includes Eat Smart and private-label brands, generated net sales of US$160m in fiscal 2019. Investment-banking firm William Blair has been hired to identify “strategic alternatives for the business and to evaluate bids”, although it stressed there is no guarantee of a deal.
Bolles added: “We have been evaluating our commoditised vegetable bag and tray business since my appointment as CEO. Our team’s approach to growth and profitability is to focus on leveraging the strength of our higher-margin product and innovation platforms.
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“Consistent with my philosophy of ‘getting smaller to get bigger’, we believe that right-sizing the legacy business will result in improved financial performance and enable Curation Foods to set a course for sustainable profitable growth.”
Under Project Swift, Landec reiterated it is also planning to sell Curation Foods’ salad dressing facility in Ontario, California, as part of a process to divest non-core assets.
To take into account the potential disposal of the vegetable bag and tray business, Landec said it is lowering its full-year guidance, a move which also builds in “unanticipated legal fees”.
It now anticipates revenues from continuing operations to increase by 4% to 6% in 2020 to $580m to $590m from a year earlier, and sees consolidated EBITDA in a range of $30-$34m.