PARSIPPANY, N.J. – A snack-heavy acquisition strategy is paying off for B&G Foods, Inc., which saw strong sales in its recently acquired snack brands offset weakness in its base business during the third quarter.
“You read all the time that snacking is more prevalent,” said David Wenner, chief executive officer, during an Oct. 17 call with analysts. “People are eating snacks five times a day instead of meals, and things like that. I really do think, and I want to make sure I’m not overemphasizing this, incrementally, this is eroding that center-of-the-store business to some extent. . . . And if that’s the case, I think we’ve hedged our bet with these acquisitions.”
For the quarter ended Sept. 28, the company reported net income of $15,350,000, equal to 29c per share, down from $16,897,000, or 35c, during the same quarter in fiscal 2012. Net sales for the quarter increased 18% to $181,350,000 from $154,155,000 during the prior-year period.
Pirate’s Brands, New York Style, Old London and TrueNorth contributed a total of $33.3 million to net sales during the quarter while sales in B&G Foods’ base business decreased 3.9%. Net sales declined for Ortega, Mrs. Dash, B&M and Las Palmas.
“Given the duration of soft center-of-the-store industry sale trends, it may well be that we are seeing a fundamental change in consumer eating patterns, away from prepared meals and toward on- the-go snacking,” Mr. Wenner said. “If that is true, we have positioned B&G Foods to follow consumers with our most recent acquisitions.”
Earlier this month, the company announced its acquisition of Rickland Orchards L.L.C. from Natural Instincts L.L.C. for $57.5 million. Launched in 2012, Rickland Orchards is a manufacturer of Greek yogurt-coated granola bars and bites. The acquisition is the fourth by B&G Foods since October 2012. In June, the company acquired Pirate Brands for $195 million, and the TrueNorth brand was acquired in May. During the fourth quarter of 2012, B&G Foods acquired the New York Style and Old London brands from Chipita America for $62.5 million.
“Although we have substantial integration work to do with our most recent acquisition, it's satisfying to know that we have our capitalization in good shape to continue executing on this very successful model if and when the right acquisition opportunities present themselves,” Mr. Wenner said.