Diamond Foods has booked a drop in first-quarter sales and earnings, hit by lower walnut supplies and the relaunch of its Emerald nut brand.

The company said net sales fell 9.2% in the three months to the end of October to US$234.7m. Higher snack sales failed to offset a decline at the group’s nut business. Snack sales increased 1.2% while nut sales fell 17.1%.

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The group saw a 6.1% drop in adjusted EBITDA, which sank to $29.1m. The Kettle Chips maker reported a non-GAAP net income of $5m but Diamond said it racked up a net loss of $42.2m in the period.

The company has been struggling to emerge from the shadow of an accounting scandal that saw incorrectly accounted payments to walnut growers. 

While first-quarter sales and earnings were down, Diamond did report an improvement in gross margin, which rose to 24.7% compared to 22.7%. The firm reiterated its outlook that it anticipates full-year adjusted EBITDA to improve

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