Dive Brief:
- Pinnacle Foods said net sales fell 1.2% to $749.8 million during its third quarter, compared to $758.8 million in the same period a year ago, according to a company release. The figure missed analyst estimates of $753.28 million, according to StreetInsdier.com. The maker of Birds Eye Frozen foods, Vlasic pickles and Duncan Hines cake mixes also reported that net earnings fell to $46.6 million versus $52.4 million a year ago.
- The manufacturer attributes these declines to the unfavorable the exit of several Aunt Jemima frozen breakfast products in the second quarter, as well as residual impact of the 2016 Boulder U.K. business wind-down and the effects of Hurricane Harvey and Irma. Still, retail consumption excluding the discontinued Aunt Jemima products jumped 3.5%. Its market share rose 0.7 share points, the 14th consecutive quarter the company has improved its market share.
- "Our results in the quarter continue to reflect strong in-market performance and our ongoing ability to navigate challenges to deliver very strong bottom-line results," Pinnacle Foods CEO Mark Clouse stated in the earnings report. "As we move into Q4 and with the discrete costs of the AJ Exit and related strategic manufacturing investments now largely behind us, we expect our financial results to strengthen."
Dive Insight:
Pinnacle seems to be recovering from its unexpected Aunt Jemima market exit last quarter. In the spring, Pinnacle voluntarily recalled 16 frozen products, including waffles, French toast and pancakes, after they were potentially contaminated with listeria. Just a few days later, Crouse announced the company would remove the products, which it was already planning to discontinue, from the market.
This was reflected in disappointing frozen sales for the quarter, which fell 4.1% to $301.4 million. The company attributes 2.8% of that decline with the Aunt Jemima exit, and 1.3% to the impact of recent hurricanes. Still, the Birds Eye franchise saw growth in the quarter — the brand's vegetables share was up 2.1 points on consumption growth of nearly 13%, and its meals were up 1.3 points on consumption growth of 8%. Pinnacle has invested in reviving its frozen food segment, and those efforts seem to be paying off.
In the grocery segment, net sales jumped 4.4% to $270.4 million, with little impact from the hurricanes. These results were buoyed by strong double-digit sales growth of Duncan Hines baking products, driven by the launch of "Perfect Size for 1" mug cake mixes.
Natural and organic foods manufacturer Boulder Brands, which the company acquired in 2015, also saw sales increase 9.3% to $101.0 million during the quarter, despite the negative effects from the wind-down of Boulder U.K. operations and a SKU rationalization initiative.
The company reaffirmed its full-year guidance for 2017, but if it continues to see underwhelming results, it could position the company as a viable takeover target. In May, Conagra approached Pinnacle to discuss a possible takeover. The deal ultimately fell through, reportedly because a price agreement couldn't be reached. But with a vast roster of well-known brands, Pinnacle could still be a tantalizing target.