"We are pleased with the start to our fiscal year," Chief Executive Richard Smucker said. "... There is little doubt that the operating environment is challenging. However, our brands are well-positioned to perform in this competitive market."
CLEVELAND, Ohio -- The J.M. Smucker Co., the Wayne County maker of Folgers Coffee, Jif Peanut Butter and Smucker fruit spreads, said sales and profits were down slightly for the first quarter of fiscal 2015, but expects better news for the rest of the year.
Highlights of its earnings report released Wednesday include:
View full sizeThe J.M. Smucker Store and Cafe in Orrville, Ohio.1. Net sales dipped 2 percent for the fiscal first quarter that ended July 31 to $1.32 billion, down from $1.35 billion in the same period last year.
The company said the $27.1 million decline reflected lower prices and more promotions, especially for coffee, and the continuing impact of its decision to leave the private label hot beverage business in its International, Foodservice and Natural Foods concerns.
That figure also includes a total gain of $23.6 million from Enray Inc., acquired in a deal that closed on Aug. 20, 2013, and a licensing and distribution agreement with Cumberland Packing Corp., which began on July 1, 2013. Enray is a California manufacturer of premium organic, gluten-free ancient grain products such as quinoa, sold under the truRoots brand.
2. Profits for the quarter declined 8 percent to $116 million from $126.6 million for the first quarter of fiscal 2014. Subtracting out the impact from "certain items affecting comparability," however, Smucker said profits would have grown 6 percent to $136.1 million from $128.4 million.
Diluted net income per common share fell a nickel per share to $1.14, versus $1.19 per share last year. Excluding non-comparable items, the company said net income would have risen 11 percent to a record $1.34 per diluted common share from $1.21 per share.
3. Both sales and profits fell short of analysts' expectations. Some had been expecting $1.37 billion in revenue and $1.37 profit per share.
View full sizeJ.M. Smucker CEO Richard Smucker "There is little doubt that the operating environment is challenging," Chief Executive Richard Smucker said in a written statement. "However, our brands are well-positioned to perform in this competitive market."
"Looking ahead, we have strong merchandising and marketing programs in place for the back-to-school and holiday periods," President and Chief Operating Officer Vince Byrd said in the same statement. "We remain optimistic for another year of profitable growth."
4. The company sold higher volumes of several of its best-selling retail brands, including Crisco oils, Jif peanut butter and Folgers coffee. That helped compensate for lower sales of Pillsbury baking mixes, flour and frostings, and Santa Cruz organic beverages.
5. Smucker's retail coffee brands continue to percolate, with sales volumes up 2 percent for Folgers, 24 percent for Cafe Bustelo, 8 percent for K-Cups, 3 percent for Dunkin' Donuts packaged coffee sold in supermarkets, and 2 percent for Folgers.
View full sizeJ.M. Smuckers' Cafe BusteloNet sales were down 2 percent for the quarter, to $502.7 million, because Smucker raised its retail coffee prices 9 percent during the quarter to reflect higher green coffee costs, but increased its promotions to remain competitive.
6. Sales of Smucker's consumer brands fell 3 percent, to $522.8 million, because of a 9-percent price cut for Crisco brand oils and shortenings in the fourth quarter of fiscal 2014. Sales volumes grew 4 percent for Jif, 12 percent for Smucker's Uncrustables frozen sandwiches, 2 percent for Smucker's fruit spreads, and 14 percent for Crisco brand. Sales volumes of Pillsbury brand fell 10 percent.
7. Smucker said it expects sales to grow "slightly less than 5 percent" in fiscal 2015, including estimated sales of $25 million from the acquisition of Sahale Snacks nut and fruit mixes, scheduled to close next month.
Smucker's shares closed at $102.42, down 1 percent from Tuesday's close of $103.45 on the New York Stock Exchange.