PENNSAUKEN, N.J. — Even for a company that claims to be “real good at reformulating,” changes to school food programs have been a challenge, said Gerry Shreiber, chairman, president and chief executive officer of J&J Snack Foods Corp.
In a Nov. 9 conference call to discuss fiscal 2012 earnings, Mr. Shreiber said the company’s sales to schools — about $60 million annually across all product lines — have taken a hit. In the fourth quarter that included July, August and September, Mr. Shreiber said sales were down about $1 million from the comparable year-ago period. The sales decline has accelerated in J&J Snack’s first quarter, though, he said.
“We are into November and we’re already passed that $1 million,” he said. “It is off $1 million after two months. Part of that is the uncertainty that the administrative school food service system is getting from the U.S.D.A. We think that will shake out between now and the new year, and hopefully it will stabilize then.”
With all of the changes to the school food programs that have been put in place in recent years Mr. Shreiber said J&J Snack has had to reformulate nearly its entire product line — a task that has not been easy.
“Sometimes it is hard to keep up with it, and we have to satisfy not only the U.S.D.A., but the directors of the school in there, and ultimately it gets down to the student there who has to like the pretzel or the product on their (plate),” he said. “We still have some challenges left for us. We’re real good at reformulating. We are real good at keeping with the standards. We have a dedicated sales team that is on top of that. And we are hopeful that this will improve over the next couple years.
“But quite frankly, the last couple years, because of the nutritional changes, the school systems have had a negative impact on our sales and profitability. You wouldn’t know it on our overall numbers, because we are still running like hard charging horses everywhere else, but we’ve had to make up the difference.”
Mr. Shreiber said the reception by students to some of the products has been mixed.
“We get field reports and then we will get U.S.D.A. comments, and it appears the U.S.D.A. and the school system still have challenges as they attempt to influence the feeding patterns of children,” he said. “It has to taste good. We make great-tasting soft pretzels, but when they become a (whole) grain or a multigrain or a different product in there they are not near some of the taste flavor impact changes.”
Net income at J&J Snack Foods Corp. in the fiscal year ended Sept. 29 totaled $54,118,000, equal to $2.87 per share on the common stock, down 2% from $55,063,000, or $2.95 per share, in fiscal 2011. Last year’s results included a $6.6 million gain on a purchase.
Operating income in fiscal 2012 was $84,967,000, up 11% from $76,583,000 in the same period a year ago, while net sales rose 12% to $830,796,000 from $744,071,000.