- J.M. Smucker posted a better-than-expected quarterly profit helped by cost-cutting, and said it would eliminate $100 million more in annual costs, according to Reuters. Net sales fell 1.3% to $1.78 billion, marking the fourth straight quarter of decline, but narrowly beat analysts' estimates of $1.77 billion.
- The company's net income fell to $110.4 million in the fourth quarter from $191 million a year ago, as coffee sales slipped 1% and pet food fell 5%, the food manufacturer said in a statement.
- "In the new fiscal year, we continue to execute our strategic plan for sustainable, long-term growth by capitalizing on changes in consumer preferences and the retail environment," said Mark Smucker, the company's CEO. "We will fuel the momentum of our growth brands like Smucker's Uncrustables, Nature's Recipe, and Café Bustelo, while supporting our base businesses in coffee, peanut butter, pet food, and pet snacks."
Smucker has turned to a recipe popular with other food and beverage companies struggling with slowing growth and changing consumer tastes and preferences: cost cutting.
The move to boost its cost cutting by another $100 million comes as it posted lower sales during the fourth quarter in its key coffee and pet food divisions. Sales in its coffee business fell for the fourth straight quarter, declining $6.7 million to $505.9 million, lead by a 5% volume decline in its Folgers brand. Net sales in its retail consumer foods segment increased $100,000 to $473.8 million driven by improvements in its Smucker's and Jif brands.
Smucker, founded in 1897, is unusual in that it's a food company with major operations in pet food following its acquisition of Big Heart Pet Brands for $5.8 billion in 2015. The division has posted mixed results since it was purchased, but Smucker still has time to turn it around to show investors it wasn't a misguided investment. Pet food sales during the most recent period slumped $28.4 million, or 5%, to $534.5 million following lower sales of 9Lives and Meow Mix cat food.
Mark Smucker made a special point in highlighting the company's growth efforts in snacks with momentum in its Smucker's Uncrustables peanut butter and jelly sandwiches — in demand with the on-the-go crowd — and its Café Bustelo, a coffee brand that has proven popular with the millennial crowd. The company also has introduced Nature's Recipe pet food that touts real and healthy ingredients. This aligns with the trend of shoppers looking for pet foods with premium ingredients for their animals.
Last week, Smucker announced it would acquire the Wesson oil brand from Conagra Brands in a $285 million all-cash transaction, according to a company statement. Smucker expects the acquisition to add annual net sales of approximately $230 million.
Richard Smucker, chairman of J.M. Smucker, told Food Dive in March it’s hard to keep pace with consumer trends because they change frequently, making it difficult to differentiate between a fad and a trend that merits a significant investment from the company. At the time, he said the company could look to acquire new, trendier brands.
“Having startups and smaller companies in the industry is healthy, even for the bigger guys, because if you are listening and watching what they're doing you can learn, too,” Smucker said at the time. “We don’t create everything ourselves. In fact, sometimes if they do a really good job we might want to come and buy them."
With its business struggling, Smucker might be wise to look for other deals to improve its bottom line. But as the pet food acquisition has shown so far, making a big splash isn't always the right answer.