ORRVILLIE, OHIO — Lower green coffee prices and acceleration in sales of the J.M. Smucker Co.’s Uncrustables brand during the third quarter of fiscal 2020 helped the company weather headwinds in its U.S. Retail Pet Foods business. Net income for the period ended Jan. 31 rose 54% to $187.4 million, equal to $1.64 per share on the common stock.

Quarterly sales fell 2% to $1,972.3 million.

“Overall, our third-quarter financial results were in line with our expectations as our anticipated decline in net sales was offset by the benefits of our targeted actions to deliver adjusted e.p.s. growth of 4%,” said Mark T. Smucker, president and chief executive officer, on Feb. 26 during a conference call with analysts. “Net sales declined 2% compared to the prior year, reflecting softness in our dog food business, particularly related to our private label products and the Natural Balance brand. Net sales for the balance of our portfolio were essentially flat with the deflationary commodity costs being passed on to consumers through lower pricing in coffee and peanut butter, mostly offset by volume growth.”

Sales for Smucker’s U.S. Retail Coffee business unit slipped slightly during the quarter to $558.8 million from $561.6 the year prior. Segment profit ticked up to $189.5 million from $183.7 million.

“In coffee, segment profit grew even though net sales were comparable to the prior year as lower green coffee costs are being passed through to consumers,” Mr. Smucker said. “Volume in this segment grew for the sixth consecutive quarter and the Folgers brand achieved its highest volume quarter in over three years.

“Dunkin’ and Cafe Bustelo continued their growth trends, up 4% and 13%, respectively, benefiting from expanded distribution, increased household penetration and the impact of new marketing campaigns. K-Cup sales also increased 7% with growth for each brand in the portfolio.”

U.S. Retail Consumer Foods unit sales were flat, totaling $422.9 million during the third quarter of fiscal 2020 vs. $422.7 million the year prior. Segment profit fell to $84.2 million from $95.9 million.

The segment profit decline was partially attributed to a $7.5 million write-off related to the company discontinuing its Jif Power Ups brand, which was announced Feb. 19.

“The Smucker’s Uncrustables brand accelerated to 23% growth in the quarter and we expect similar growth in the fourth quarter,” Mr. Smucker said. “As we shared at CAGNY last week, we are excited about the potential of the Uncrustables brand, its continued trajectory for growth and the upcoming innovation that will expand the platform beyond peanut butter and jelly into convenient meat and cheese snacks.”

Mr. Smucker added that with the new Uncrustables plant in Colorado operating and phase two underway, the company will have ample capacity to support brand growth. Management has set a goal of generating $500 million in sales from the Uncrustables brand by fiscal 2023.

Sales fell 5% to $721.9 million in Smuckers’ largest business unit, U.S. Retail Pet Foods. The decline was attributed to volume/mix in the Nature Balance brand and issues related to private label dog food. Segment profit slipped slightly to $146 million from $147.9 million the year prior.



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