Dive Brief:
- Bob Evans Farms reported net sales from continuing operations of $112.8 million, a rise of 4.6% on an increase of $4.9 million when compared to $107.9 million year over year for Q3, according to the company’s latest earnings report. The company expects to earn between $2.22 and $2.32 per share in fiscal 2017, up from its previous estimate of between $2.15 and $2.30 per share, according to The Street.
- Food division posted "year-over-year market share and pounds sold growth in its key product categories and distribution channels." Retail channel pounds sold increased nearly 8%, with retail side-dish and sausage gains of approximately 13% and 3%. Food service sales were strong with 19% year-over-year pounds sold growth.
- Company expects to complete purchase of Pineland Farms Potato Company by May, and sell its restaurants to Golden Gate Capital by the end of its fourth quarter.
Dive Insight:
As part of its strategy shift to get out of the restaurant business and focus on its growing consumers product business, Bob Evans announced it planned to acquire Pineland Farms Potato Company. When the deal is completed, Saed Mohseni, the company's CEO, said it will start “a new era for Bob Evans Food” as its focuses on realizing the full potential of its BEF Foods business.
"The new Bob Evans Farms, further strengthened by the manufacturing and intellectual capital of Pineland Farms Potato Company, is positioned to be a higher profit and higher growth company that is expected to provide better returns to shareholders and an enhanced array of products for a growing national customer base," Mohseni said.
In the latest report, BEF said retail side-dish and sausage pounds increased 13% and 3%, respectively. The company’s rise in generally accepted accounting principles income can be attributed to an increase in pounds sold, the favorable sales mix of higher-margin side dish items, lower selling, general and administrative expenses costs and $1.2 million of lower net sow costs. This was partially offset by increased advertising and higher freight expenses due to more pounds sold. The company expects sales in its fiscal 2017 year for BEF Foods between $390 million and $410 million.
The company's decision to divest its challenged restaurant unit and focus solely on its growing food products business was widely praised by shareholders and an activist investor. When the food products division becomes a stand-alone company, some believe the maker of sausages, potatoes and other items to become a takeover target by one of the large food manufactuers looking for growth.