February 23, 2024
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Dole plc sells off fresh vegetables division for $293M

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In a continued effort to pay down its debt, Westlake Village-based Dole plc has sold off its fresh vegetables division to an affiliate of Fresh Express Inc., a wholly-owned subsidiary of Chiquita Holdings, for $293 million.

The sale is expected to close within the next two quarters, pending approval, Dole said in a press release.

In a press release, Carl McCann, the company’s executive chairman, said he believes the sale will “strengthen our financial position and increase the Group’s focus on and investments in our core activities.”

“Combining with Fresh Express will improve the offering and service to customers and consumers through increased investments in innovation, efficiencies, and food safety,” he said.

“We would like to thank the dedicated employees of this business for their valuable contributions over the years.”

According to Dole, the company’s fresh vegetables division includes operations related to the processing and sale of whole produce such as iceberg, romaine, leaf lettuces, cauliflower, broccoli, celery, asparagus, artichokes, green onions, sprouts, radishes, and cabbage, as well as salads and meal kits.

The business has agricultural operations and four processing plants across the United States and employs more than 3,000 people.

The company’s fresh vegetables division generated $1.28 billion in revenue for the fiscal year ending Dec. 31, 2021. Dole will be releasing fiscal year 2022 numbers around March 14.

“With this transaction, we want to combine our best practices across food safety, the freshness of produce, mechanization, automation, and innovation to offer rapidly expanding choices of safer and healthier produce products to the consumer. This combination will ultimately help drive growth in the entire produce industry and support higher demand for our valued produce grower base in California, Arizona, Colorado, Florida and across the entire USA,” Chiquita Holdings chairman Jose Luis Cutrale Jr. said in a press release.

“The combination of both businesses, when consummated, will allow us to continue to create the best products under the Fresh Express umbrella. The anticipated cost savings from this combination will help partially mitigate the recent period of inflationary pressures experienced throughout the produce, food and beverage sectors of the economy.”

Dole has been doing a lot of restructuring since going public in 2021.

In fact, Dole plc was formed in 2021 last year with the merger of Dole Food Company and Total Produce. The new company went public on July 30, 2021. It opened at $15 per share, and since then, Dole’s stock is down 20% as well.

Johan Linden, Dole’s chief operating officer, had noted his displeasure with Dole’s fresh vegetable segment before.

During the company’s second-quarter 2022 earnings release on Aug. 23, Linden said he was “disappointed” with Dole’s vegetable category in the second quarter, which had decreased 6% year-over-year to generate $309.2 million.

There was an improvement in the second quarter from the first in the fresh vegetable division, but “not to the levels we anticipated in our turnaround plan, and we expect now to face an unfavorable environment through the second half of 2022.”

“While we remain confident in our ability to get vegetable business back to profits, we do not now expect to see a full recovery in our vegetable business until 2023,” Linden said during that second-quarter earnings call.

By the end of the third quarter, Dole’s vegetable sales were at $890.8 million, down from $983.7 million through the same time period a year ago, a decrease of about 10% due to much lower volume sales.

CEO Rose Byrne said during the company’s third-quarter call that the company’s vegetable segment remained “unlucky.”

“Our third quarter performance in Fresh Vegetables remained disappointing and while we are making progress on our turnaround plan, it is slower than we would like. Category demand was softer in Q3 and ongoing inflation continues in important cost areas. In addition, we faced higher sourcing costs due to weather-related events in key California and growing regions, which impacted the entire industry,” Byrne said.

Dole announced the sale before the markets opened Jan. 31. Investors liked the news apparently, as shares were up nearly 8% during the trading day, closing at $11.53, Dole’s highest closing price since May 6. Year-over-year, Dole shares are down 20.8%.