Sales of Reckitt baby formula to take hit
Reckitt, the British consumer goods company, stated on Wednesday that sales of its Mead Johnson baby formula powder are expected to take a short-term hit due to a tornado damaging a third-party warehouse in the United States.
The Mount Vernon warehouse in Indiana, crucial for Reckitt's Mead Johnson Nutrition business, has been inactive since the tornado hit on July 9. The facility stored both raw materials and finished products, the company noted.
All employees are safe, the company added, saying it had diverted deliveries to other warehouses in the United States.
Some nutrition SKUs (product varieties) will likely be affected in the short term, a Reckitt spokesperson said.
According to Reuters, the company could not estimate when the warehouse would be up and running again, but said it was working as quickly as possible with local authorities and regulators to minimise the disruption.
"We are partnering with customers and suppliers on expedited recovery efforts to minimise disruption by leveraging our global supply chain and managing inventory at our other U.S. warehouses," the spokesperson said.
This is not the first time Reckitt has had to rely on its worldwide supply chain in an emergency, which can take time because of the regulatory hurdles the company needs to clear with the U.S. Food & Drug Administration (FDA).
In 2022, during a months-long U.S. shortage of baby formula, Reckitt flew 65 tons of baby formula to Chicago from its plant in Singapore. A few months before, it said it was working with the FDA to increase baby formula supply, including expediting the approval of some products made at a facility in Mexico.
Reckitt said on Wednesday it had comprehensive property damage and business interruption insurance, which it expects will largely offset the impact on earnings.
This marks a third setback for the company this year.
In February, an investigation showed some employees had under-reported liabilities in the Middle East, triggering the biggest one-day drop in Reckitt's shares since December 1999.
A month later, the stock tumbled again after an Illinois jury ordered Reckitt's Mead Johnson unit to pay $60 million to the mother of a premature baby who died of an intestinal disease after allegedly being fed one product made by the company’s Enfamil baby formula brand.
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