Smucker Reports Sales Decline
August 23 2016 - 8:50AM
Dow Jones News
J.M. Smucker Co. said price deflation hurt sales in its latest
quarter, though the packaged-food company said cost cuts would help
it meet its full-year earnings target.
Following the disappointing quarterly sales result, the stock
fell 4.1% to $149.80 in premarket trading.
Like other food companies, the Ohio maker of its own brands of
jams and peanut butter, as well as Pillsbury pastries and Folgers
coffee, has contended with consumers' shift away from packaged
goods and toward more fresh and natural options. But as investors
have looked favorably on dividend-yielding stocks amid ultralow
global interest rates, Smucker's stock had climbed 27% this year
through Monday's close.
In recent moves to diversify its business and respond to
changing consumer preferences, Smucker last year bought Big Heart
Pet Brands for about $3.2 billion, and in November agreed to sell
its canned-milk business.
On Tuesday, the company attributed the 7% decline in fiscal
first-quarter revenue to lower prices and said the divestiture of
its milk business and a disappointing performance in its pet foods
segment—where sales fell 5.5% from a year earlier—contributed to
the pressure.
"Despite the impact of deflation on the top line, we remain on
track to achieve our original expectations for full-year earnings
per share," said Chief Executive Mark Smucker, adding that cost
cuts are helping to support Smucker's bottom line. In the most
recent period, selling, distribution and administrative expenses
decreased 8.2%.
In all for the quarter, the company reported a profit of $170
million, or $1.46 a share, up from $136.4 million, or $1.14 a
share, a year earlier. Excluding certain items, and helped by a
lower share count, earnings per share rose to $1.86 from $1.60.
Revenue fell to $1.82 billion from $1.95 billion. Analysts
polled by Thomson Reuters had expected adjusted earnings of $1.74 a
share and $1.89 billion in sales.
For the year ending in April 2017, Smucker continues to project
$7.60 to $7.75 in adjusted earnings per share, bracketing the
average analyst estimate of $7.70.
Write to Lisa Beilfuss at lisa.beilfuss@wsj.com
(END) Dow Jones Newswires
August 23, 2016 08:35 ET (12:35 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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