• by Karlene Lukovitz  @KLmarketdaily, August 5, 2010

Smart Balance, Inc. reported a more moderate sales loss than projected for its second quarter, and updated investors on the progress of strategic initiatives aimed at repositioning the company as a multi-category, multi-brand "health and wellness innovation platform."

Smart Balance saw total net sales decline by 4.4%, to $55.6 million, in Q2.  However, the company had projected a decline of 6% to 7% (to $54 million).  The company projects full-year net sales growth in the range of 2% to 4% and cash operating income in line with that of the prior year, excluding one-time items.

The Q2 sales decline reflected lower case shipments in spreads (-6%) and grocery products (-11%) due to continued competitive promotional pressure and consumer price sensitivity, according to the company.  

Spreads were also affected by overall category weakness:  The category's retail sales in the food channel declined 12% in dollars and 7% in units during Q2 2010 versus same period last year, according to Nielsen.

However, Smart Balance saw a slight uptick in its spreads share of market (to 15.5%, versus 15.4% in Q2 '09), and its spreads losses were partially offset by expanded distribution of its dairy-aisle milk and sour cream products.

The company's enhanced milk initiative has now reached 66% distribution in the food channel and this, combined with its newly launched Earth Balance Soymilk brand, puts Smart Balance "well on [its] way" toward its transition to a health/wellness platform, said chairman/CEO Stephen Hughes.

Smart Balance expects both its three-tiered spreads strategy and dairy case expansion initiatives to "drive significant growth over time," he said.