What happened

Shares of Dean Foods (NYSE:DF) declined 46.9% in 2017, according to data from S&P Global Market Intelligence, as the food and beverage company endured declining milk sales and a difficult retail environment.

Dean Foods' first big move last year was an 8% single-day drop following the release of its Q4 2016 results in February. At the time, the company saw revenue decline slightly on a year-over-year basis to just over $2 billion, hurt by a 1.2% decline in fluid milk sales volume. And though it managed to post modest 5.6% growth in adjusted earnings to $0.38 per share, its bottom line fell well short of Wall Street's expectations.

Various Dean Foods products including containers of Dairy Pure, Milk, ice cream and sour cream.

IMAGE SOURCE: DEAN FOODS

So what

Nonetheless, Dean Foods CEO Ralph Scozzafava called it the end to a "strong year," further promising that the company would continue to invest in strategic initiatives and brand-building efforts to drive future growth. But however well-meaning, those investments had a significant negative impact on Dean Foods' bottom line; its guidance at the time called for first-quarter 2017 earnings of $0.12 to $0.20 per share, far below the $0.40 investors were anticipating.

Dean Foods shares only continued to drift lower over the next several months, particularly as its first-quarter earnings arrived near the low end of that already disappointing range. 

But its downward momentum accelerated, with a nearly 27% drop in August, after its second-quarter 2017 results came out. Dean Foods' Q2 revenue rose 4.2% year over year to $1.93 billion and translated to a 43% decline in adjusted net income to $19.6 million, or $0.21 per share. Both figures fell short of consensus estimates, which called for revenue of $1.93 billion and earnings of $0.31 per share.

Scozzafava sounded less optimistic this time, blaming a "challenging and rapidly evolving retail environment" for the troubles.

"We experienced volume pressure from both a macro and competitive perspective that impacted our total volume performance within the quarter," he added, "and we anticipate this will carry forward for the remainder of 2017."

Now what

Most recently, Dean Foods shares were little changed after the third-quarter report in November. But the company did tease that it's in the early stages of an enterprise-wide cost-savings program that should begin to yield tangible results this year. In addition, Dean Foods revealed that it recently won some new business that will start to drive incremental volume in late 2017 and early 2018.

As such, you can bet investors will be watching closely when Dean Foods announces fourth-quarter 2017 results the middle of next month. In the meantime, given its volume struggles over the past year, it was no surprise to see Dean Foods stock pull back so hard last year in response.

Steve Symington has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.