Shares of Lifeway Foods, Inc., the leading U.S. supplier of organic and non-organic kefir cultured dairy products, sank more than 7 percent on Wednesday to a 14-year low of $3.01.
The Morton Grove, Ill.-based company (Nasdaq: LWAY), which now has a market cap of $48.4 million, also produces cupped kefir and cheese, frozen kefir, specialty cheeses, probiotic supplements and a ProBugs line for kids.
Lifeway’s stock has tumbled since reaching its 52-week high of $10.75 in October 2017. But even since March 30, 2015, when the company’s shares hit an all-time high of $21.90, Lifeway has shown a consistent decline, especially with recent drops in revenue and squeezed margins.
Last month, Lifeway reported an 85 percent drop in second quarter net income of $170,000, or $0.01 per share, on revenue of $27.1 million, down 14.6 percent.
Lifeway said the second quarter “decline in volume/mix was primarily driven by volume softness in our branded and ProBugs drinkable kefir, partially offset by incremental volume of new item introductions. The volume decline reflects lower consumption of our products that is consistent with the overall volume decline in dairy and cultured dairy product categories.”
Gross profit for the quarter ended June 30 dropped 25.9 percent, or 380 basis points, to 25.4 percent from 29.2 percent in last year’s second quarter.
“The lower gross profit percentage primarily reflects the coupon spend in the second quarter 2018 that did not occur in the second quarter 2017, partially offset by lower trade spend,” the company said in its second quarter 10-Q. “Additionally, gross profit was adversely impacted by lower volumes relative to fixed costs.”
Lifeway said sales of its flagship drinkable kefir, other than ProBugs, fell 15 percent to $20.7 million during the second quarter. That follows a 14-percent drop in first quarter sales for the flagship product. For all of 2017, Lifeway recorded a 6.5 percent drop in sales of its drinkable kefir, which represented 76 percent of its total sales.
The company said it is rolling out its new plant-based probiotic pea milk called Plantiful nationwide this fall. The company recently introduced its new Organic Skyr line of Icelandic-style yogurt, as well as several new vegan products, including line of organic, non-dairy carbonated probiotic Elixir drinks in four flavors: Tangerine, Hibiscus, Ginger and Elderberry.
For all of 2017, Lifeway reported companywide sales of $118.9 million, down 4 percent compared to 2016, mainly due to a 2.7 drop in volume. The company also posted a loss of $346,000, or -$0.02 per share, for 2017, compared to net income of $3.5 million, or $0.22 per share, in 2016.
Since 1999, France-based Danone S.A., the world’s largest yogurt producer, has owned 22 percent of Lifeway’s stock. The Smolyansky family, including Ludmila, Julie, and her brother Edward, own the majority of Lifeway’s common stock.