SuperPretzel product sales were relatively strong in the quarter.

PENNSAUKEN, N.J. — J&J Snack Foods has a lot of irons in the fire that are “beginning to smoke,” Gerald Shreiber, founder, chairman, president and chief executive officer of J&J Snack Foods, told analysts during a Nov. 6 conference call. Those “irons” will be key to spurring a turnaround for the company, which slogged through a tough fourth quarter and overall challenging fiscal year.

Net income at J&J Snack Foods fell 2% in fiscal 2015, decreasing to $70,183,000 in the year ended Sept. 26 from $71,814,000 in fiscal 2014. Sales, though, increased 6% to $976,256,000 from $919,451,000. Operating income increased 2% to $110,888,000 from $106,848,000.

For the fourth quarter, income slipped 11% to $19,828,000, or $1.06 per share, from $22,189,000, or $1.19 per share, in the same period a year ago. Net sales totaled $259,772,000, up 2% from $253,494,000 a year ago.

Gerald Shreiber, J&J Snack Foods
Gerald Shreiber, founder, chairman, president and c.e.o. of J&J Snack Foods

“Sales of soft pretzels in food service weakened as the year progressed,” Mr. Shreiber said. “Sales to convenience stores continued to be strong during the quarter, but sales to schools and restaurant chains were down significantly from a year ago. Frozen juices and ices in food service were up slightly, due entirely to sales of Wholefruit frozen organic juice tubes to one customer. In-house sales in food service continued to decline, down 3% in the quarter and 10% for the year. Churro sales continue to be very strong, aided by sales of Oreo Churros, which were introduced about a year ago.”

Mr. Shreiber said Oreo Churros recently were approved to enter the retail market as well.

“Sales of soft pretzels in our retail supermarket segment were relatively flat on a volume basis for the year, but down 2% for the quarter, although our (core) SuperPretzel product sales were relatively strong in the quarter, offset by declines in two newer items, our SuperPretzel Bavarian pretzel bread and SuperPretzel dog products,” Mr. Shreiber said. “Frozen juice and ices were flat on a volume basis, with Italian ice — with sales of Luigi’s Italian Ice, and weakness in some of our other brands.

“Handheld sales in the retail supermarket were down 27% in the quarter. A sales drop to one customer accounted for more than half of the decrease, and lower sales of Patio Burritos. In ICEE and frozen beverages, all facets of the business continue to perform well.”

In 2011, J&J Snack Foods acquired the handheld business from Omaha-based ConAgra Foods. The addition of the business allowed J&J Snack to manufacture handheld sandwiches and pies. With the recent proliferation of protein-heavy products, Mr. Shreiber was asked why the business has struggled.

“When we bought it, it was already spiraling down in sales,” he explained. “And it has only been recently that we have made major R.&D. and product improvement efforts on there, and we’re seeing some of the first benefits of this in the past six months or so. This product is going down under the label Pretzel Melts and Biscuit Melts. We’re hopeful of those products. We’ve also been private labeling for some of the companies like Nutrisystem and others in there and these products will be hitting in January, but you’re right, we bought the product and that whole protein wrap category was on trend, and it allowed us to take our pretzel products and fit it into this category. We’re looking at others who are doing it well. We’ve also been shadowed to some degree by Nestle who has struggled with it, but we expect to make improvements in the handheld category over the next year.”