Smucker Reports 3% Sales Decline, Misses Expectations

Smucker (SJM.US), the largest packaged food producer in the United States, has released its fourth-quarter earnings report, revealing a 3% year-over-year decline in sales to $2.1 billion, falling short of market expectations. The company's non-GAAP earnings per share stood at $2.31, surpassing market forecasts but down from $2.66 in the same period last year. Adjusted gross profit for the quarter decreased by 9% compared to the previous year.

Same-store sales declined by 1%, reflecting a 3% drop in volume and mix, primarily due to decreased sales in pet snacks, baked goods, and contract manufacturing related to the divested pet food brand, as well as reduced sales of fruit jams. However, these declines were partially offset by increased sales of Uncrustables sandwiches, a popular product for the company.

During the quarter ending April 30, the company's U.S. retail coffee business saw an 11% increase in sales, while its U.S. retail pet food business experienced a 13% decrease. The acquisition of Hostess in November 2023 also impacted Smucker's sales, as the company, known for products like doughnuts, faced challenges due to reduced consumer spending.

CEO Mark Smucker indicated that the company plans to mitigate rising raw material costs by increasing prices. The net price realization increased by 3%, primarily driven by higher coffee prices, although net prices for baked goods and pet snacks decreased.

Looking ahead, Smucker's earnings guidance for the next fiscal year is below Wall Street's expectations, signaling continued operational challenges for the company. The company projects adjusted earnings per share for the 2026 fiscal year to be between $8.50 and $9.50, with an average estimate of $9.00, compared to the market's average expectation of $10.25.

Smucker's struggles highlight broader challenges in the U.S. packaged food industry, including rising raw material costs and consumer sensitivity to price increases. The company's efforts to navigate these issues will be crucial in determining its future market stability.