J.M. Smucker Co. (SJM) cut its full-year sales and earnings
guidance, citing a more competitive pricing environment and lower
expectations for sales volume.
The company, meanwhile, delivered mixed results for the fiscal
third quarter, with earnings and margins rising while sales fell.
The results came in below Wall Street expectations.
Smucker said it now expects sales to decline 5% for the year,
after previously projecting a 2% decline in November. The company
also slashed its earnings estimate to between $5.55 and $5.60 a
share from its previous target of $5.72 to $5.82.
In addition to pricing competition and lower volumes, Smucker
said the lower guidance reflects an unplanned trade spending
accural adjustment in the most recent period, along with headwinds
from foreign exchange.
The U.S. consumer foods segment, which includes Smucker's fruit
spreads and Jif peanut butter, posted flat volume in the period,
along with a 4% decline in sales. Profit for the segment declined
about 1%, while lower commodity costs were offset by increased
manufacturing and marketing costs, as well as lower realized
prices.
Smucker's U.S. coffee business, which includes Folgers and
Dunkin" Donuts brands, posted a 2% volume increase, but lower
prices helped weigh on sales, which were down 8% in the quarter.
The segment's profit, however, grew 4% on lower coffee costs,
marketing expenses and manufacturing overhead.
"We underperformed in our foodservice and spreads businesses,
but view these as near-term issues," Chief Executive Richard
Smucker said. "While the fourth quarter will be a difficult
financial comparison, we are optimistic about our prospect for
growth as we head into the new fiscal year."
For the period ended Jan. 31, Smucker posted earnings of $166.7
million, or $1.59 a share, up from $154.2 million, or $1.42 a
share, in the prior-year period. Excluding special items, per-share
earnings rose to $1.66 from $1.47.
Sales fell 6% to $1.47 billion, reflecting lower prices,
particularly on coffee and peanut butter.
Analysts polled by Thomson Reuters most recently projected
earnings of $1.68 a share and revenue of $1.53 billion.
Gross margin widened to 37.2% from 34.4%.
Shares of Smucker were inactive premarket. The stock closed at
$95.14 Thursday and is down 8.2% so far this year.
Write to Michael Calia at michael.calia@wsj.com
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