American food company Kraft Heinz reported disappointing sales numbers on Thursday, sending its shares further down to new record lows.
Due to its worse-than-expected earnings, the company was forced to write down the value of its business units by more than $1 billion. The company also withdrew its full-year forecast given its current situation.
The company's latest earnings report marked the 12th straight quarter of disappointing sales. Kraft Heinz reported net sales of $12.37 billion, a 5 percent drop compared to the same period last year.
Net income fell by more than 51 percent to $854 million, or 70 cents per share. Despite the low figures, the company remained positive and proclaimed that it expects better results for the second half of the year.
Given its less-than-stellar quarterly result, Kraft Heinz announced that it would be withdrawing its previously stated full-year outlook. The company initially forecasted earnings of around $6.3 billion to $6.5 billion for 2019, adjusted before interest, tax, depreciation, and amortization.
Following the release of the earnings report, Kraft Heinz' shares tumbled by more than 15 percent. The company's shares have so far lost a third of its value since February of this year. The release of the earnings report was also delayed due to an ongoing internal investigation into the company's accounting practices.
The company's chief financial officer, David Knopf, mentioned during an earnings call that he was very dissatisfied with the company's financial performance. Knopf pointed out that the earnings decline over the past quarter was "simply unacceptable" and that something needs to be done.
Kraft Heinz, like other major consumers goods companies, has been hit hard by increased competition from private-label brands and evolving consumer tastes.
Retailers such as Amazon, Walmart, and Kroger, have invested heavily in their store-branded products, which has eaten away into sales of packaged goods companies. Brands released by retailers such as Costco's Kirkland brand have managed to outsell products sold by Kraft Heinz in recent years.
Apart from facing stiffer competitions, Kraft Heinz is also undergoing some radical internal changes following the appointment of new leaders by Brazilian private equity firm 3G Capital. Under the new leadership, heavy cost-cutting measures have been put in place.
The controversial new budgeting measures have greatly reduced marketing budgets for the company's key brands, resulting in the loss of market share. Industry experts have argued that instead of focusing more on cost-cutting measures, the company should instead focus more on efficiency and rebuilding its more popular brands.