ORRVILLE, OHIO — Coffee sales at retail are piping hot for the J.M. Smucker Co., which increased its guidance for the fiscal year while reporting second-quarter results. Dunkin’ net sales jumped 24% in the quarter ended Oct. 31. Café Bustelo net sales were up 19%.
“Bustelo, obviously, has a very strong South Florida and New York Latino base but continues to grow with non-Latino millennials,” said Mark T. Smucker, president and chief executive officer of Smucker, in a Nov. 24 earnings call.
He added Dunkin’ coffee now comes in a canister.
“That item has been doing extremely well also,” he said.
Orrville-based Smucker in the quarter posted net income of $230.8 million, or $2.02 per share on the common stock, which was up 9% from $211.2 million, or $1.85 per share, in the previous year’s second quarter. Net sales increased 4% to $2.03 billion from $1.96 billion behind growth in the US retail consumer foods and US retail coffee segments.
Smucker now expects net sales in the fiscal year to increase 1% to 2% compared to the prior year, which is up from a previous guidance of 0% to 1%. Adjusted earnings per share are expected to range from $8.55 to $8.85, which is up from a previous guidance of $8.20 to $8.60. The updated guidance does not include the impact of Smucker’s pending sale of its Crisco oils and shortening business to B&G Foods, Inc.
In US retail coffee, net sales rose 9% to $594.7 million as people continued to brew coffee at home during the COVID-19 pandemic. Dunkin’, Café Bustelo and Folgers brands drove favorable volume/mix. Sales of Folgers increased 2% due to gains in roast and ground and K-Cup pods.
“In the K-Cup segment, we continue to grow at over two times the category rate and gained nearly two share points in the quarter,” Mr. Smucker said. “Over 1.5 million net new households consumed at least one of our coffee brands during the quarter. As new coffee habits have formed (during) the pandemic, we have the opportunity to retain a substantial portion of these new consumers for the long term. We will support continued momentum with increased marketing investments in the back half of this fiscal year.”
In US retail consumer foods, net sales jumped 12% to $479.1 million. Elevated at-home consumption for Smucker’s Uncrustables frozen sandwiches, Crisco oils and shortenings, and Jif peanut butter drove an increase of 7 percentage points from volume/mix.
“In snacking, our Smucker's Uncrustables business continued to deliver exceptional growth,” Mr. Smucker said. “Second-quarter net sales increased 16%, and the brand gained nearly one full retail share point.”
Smucker has increased its capital expenditures estimate for this year to $315 million from $300 million estimated at the beginning of the year, primarily because of investments in an Uncrustables facility in Longmont, Colo., said Tucker H. Marshall, chief financial officer for Smucker.
“And as we go into next fiscal year, we would anticipate seeing elevated levels of CapEx as we continue to build out the next phase of the Longmont facility, which is a new bakery, and additional manufacturing lines,” he said.
In international and away from home, net sales in the quarter fell 10% to $251.5 million. A 24% decline in away from home was offset partially by a 7% increase in international.
In US retail pet foods, net sales slipped 0.2% to $708.7 million. Growth in Meow Mix and private label cat food as well as in Pup-Peroni and Milk-Bone dog snacks was offset partially by reduced volume/mix for dog food.
Companywide for the six months ended Oct. 31, Smucker recorded net income of $467.8 million, or $4.10 per share on the common stock, which was up 28% from $365.8 million, or $3.21 per share, in the same time of the previous year. Six-month net sales increased 7% to $4.01 billion from $3.74 billion.