Dean Foods (DF 8.70, -1.43) has slid 14.1% in pre-market after the dairy company delivered underwhelming results and guidance. Today's decline has pressured the stock to levels not seen since late 2011.
The company reported below-consensus fourth quarter earnings of $0.25 per share on a 4.1% year-over-year decline in revenue to $1.93 billion, which was also shy of estimates. The company expects an elevated level of uncertainty in fiscal 2018, evidenced by its wide guidance range. Dean Foods expects that earnings for fiscal 2018 will be between $0.55 per share and $0.80 per share, which is well below market expectations.
Gross margin declined to 23.07% from 24.85% one year ago.
Shares of Dean Foods have had a rough go of it in 2017 and with today's decline to levels not seen in seven years, 2018 has started in similar fashion. Cognizant of its issues, the company announced it will undertake a company-wide cost productivity program to improve results in 2018 and beyond. The assessment phase has been completed, and the company is now starting to implement the planned initiatives.
Among steps that will be taken, Dean Foods will rescale its supply chain by consolidating and adjusting the size of its manufacturing capacity to better match demand. There are plans to consolidate the company's plant network while maintaining quality control.
In addition, the company is optimizing spend management by coordinating procurement across the enterprise. This should lead to lower costs.
Finally, the company is reorganizing its structure to improve decision making and relationships with customers and suppliers. The first phase of this step was completed in the fourth quarter of 2017 and the first quarter of 2018.