Soft pretzel sales spur earnings, sales gains at J&J Snack

by Eric Schroeder
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PENNSAUKEN, N.J. — Net income of J&J Snack Foods Corp. in the third quarter ended June 29 totaled $21,172,000, equal to $1.13 per share on the common stock, up 13% from $18,672,000, or 99c per share, in the same period of fiscal 2012.

Sales for the third quarter of fiscal 2013 were $237,036,000, up 5% from $226,554,000.

“Sales of soft pretzels and food service continued to be extremely strong and include new products such as rolls, sticks and soft pretzel buns to casual dining restaurants and club stores,” Gerry Shreiber, chairman, president and chief executive officer, said during a July 30 conference call with analysts. “Frozen juice bars and Icees sales in food service were down as we continued to be impacted by the elimination of the U.S.D.A.’s school food service program in this area of our business.”

Sales to food service customers increased $6,758,000, or 5%, in the third quarter, to $145,222,000. Soft pretzel sales to the food service segment increased 22% to $36,136,000, while frozen juices and Icees sales fell 16% to $16,468,000.

Mr. Shreiber said J&J Snack has been able to build up its soft pretzel business by being innovative and reaching out to a variety of markets.

“If you look back at our soft pretzel, it’s a core product and over the years we’ve expanded it, filled it, put it in boxes, put it in cages, made it twisted, made it longer, and filled it,” he explained. “We continue to do these things, and every once in a while a customer will come to us and they’ll want to have something that will be entirely different. And we’re working on some of these things now, and you may see one or two of these things over the next three to six months throughout the landscape.”

He said the company has done “a terrific job” of “infiltrating” the company’s pretzel products into fast-food and restaurant chains.

“We expect that we will continue to be hopefully stampeding with these products across the landscape,” he added.

Bakery product sales, excluding biscuit and dumpling sales and fruit and fig bars, increased $1,345,000, or 2%, as sales increases and decreases were spread throughout the customer base.

Frozen beverage and related product sales increased 5% to $60,734,000, with beverage sales accounting for $40,996,000 of that total.

Sales of products to retail supermarkets increased $1,225,000, or 4%, to $31,080,000 in the third quarter and were up 2% at $75,336,000 in the nine months. Soft pretzel sales sold to supermarkets were up 12% in the third quarter to $8,576,000, and were up 12% to $27,200,000 for the nine months on a unit volume increase of 6% for the quarter and 10% for the nine months. Soft pretzel sales benefited from increased distribution of sweet cinnamon and pretzel dog varieties and perhaps from additional advertising, J&J Snack said.

Also during the call Mr. Shreiber addressed capacity utilization, noting that of J&J Snack’s 15 plants, 11 or 12 are being utilized “very, very efficiently.”

“One or two of them, you know, we were looking for more products to put in there and one of the product lines that’s really growing for us of course is the soft pretzel — the entire category,” he said. “We doubled our (Carrollton) Texas plant about a year-and-a-half ago. We’re also looking for future expansion of our pretzel and pretzel-like products, and we think we have room within our headquarters here in Pennsauken and/or our Bellmawr (N.J.) plant. So, we have some ideas and thoughts on the table, but we’re pretty good at building and refreshing on the run.”

For the nine months ended June 29, net income was $44,058,000, or $2.34 per share, up 27% from $34,580,000, or $1.83 per share, in the same period a year ago. Net sales rose 7% to $629,770,000 from $588,575,000.

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