(Reuters) - Diamond Foods Inc
The company, known for its Emerald nuts, Kettle chips and Pop Secret popcorn, said non-retail walnut sales in the ongoing fiscal year decreased significantly due to less supply.
Last month, some California farmers told Reuters they planned to stop selling their walnuts to Diamond in the wake of an accounting scandal over grower payments that has claimed the jobs of the company's chief executive and chief financial officer.
However, the company said its major brands gained market share and outperformed rivals in grocery stores and some other retailers for the twelve-week period ended February 18.
Diamond also said it was making "substantial progress strengthening its financial reporting and control capabilities" and in restating financial statements for fiscal years 2010 and 2011.
The company retained Dean Bradley Osborne Partners LLC as its financial adviser to look for ways to strengthen its balance sheet, which is saddled with more than $500 million of debt.
Analysts have predicted that Diamond is likely to breach its debt covenants because of the impending restatements.
Dean Bradley Osborne is a boutique firm started by a group of former Morgan Stanley
The company's shares, which have lost three fourths of their value since September, were up 4 percent at $25.73 in morning trade on the Nasdaq.
(Reporting by Mihir Dalal in Bangalore; Editing by Saumyadeb Chakrabarty)