ORRVILLE, OHIO — Third-quarter performance exceeded J.M. Smucker Co.’s expectations, as elevated at-home consumption, improved execution of the company’s strategy, and momentum behind its brands led to a sharp gain in earnings in the period.
Net income for the period ended Jan. 31 rose 40% to $261.5 million, equal to $2.32 per share on the common stock, up from $187.4 million, or $1.64 per share, in the same period a year ago.
Quarterly sales rose 5% to $2.077 billion from $1.97 billion.
“We are delivering exceptional financial performance while significantly increasing investments in our brands, strengthening our balance sheet and returning cash to shareholders, all of which are important building blocks for supporting long-term growth and increasing shareholder value,” Mark T. Smucker, president and chief executive officer, said during a Feb. 25 conference call with analysts.
US Retail Consumer Foods unit sales increased 5.8% to $447.6 million from $422.9 million during the third quarter of fiscal 2019. Segment profit soared 32% to $110.9 million, up from $84.2 million a year ago.
“The actions we have taken on the Jif brand led to over 20% sales growth on core peanut butter offerings,” Mr. Smucker said. “In multi-outlet retail sales, Jif was the fastest-growing national brand in the quarter, increasing over 13%, more than twice the category average. This growth reflects benefits of improved distribution and in-stocks, strong marketing support, pricing actions in response to higher costs and competitive supply disruption. The Jif brand gained over 3 points of volume and dollar share sequentially from the second quarter, and our total peanut butter portfolio grew to over a 50% share of the peanut butter category.”
Mr. Smucker said the company’s Uncrustables business also delivered exceptional growth during the third quarter, as net sales for the brand increased 21%.
“Household penetration is up 23% compared to a year ago,” he said. “For our combined US Retail and Away From Home segments, the Uncrustables brand delivered $100 million of net sales this quarter, recording its 27th consecutive quarter of growth. The brand is on pace to deliver over $400 million of net sales this year and is on track to exceed our $500 million target in fiscal year 2023.”
Sales for Smucker’s US Retail Coffee business unit increased 12% during the quarter to $625.9 million from $558.8 million the year prior. Segment profit moved up 11% to $210.7 million from $189.5 million.
“The Dunkin’ and Café Bustelo brands as well as K-Cups have become an increasingly important part of our portfolio, collectively growing over 20% and accounting for over 50% of segment net sales in this quarter,” Mr. Smucker said. “Café Bustelo and Dunkin' are the two fastest-growing brands in the coffee category with 52-week sales up 28% and 21%, respectively.
“The Dunkin’ brand has eclipsed $1 billion in all channel retail sales dollars, inclusive of club and e-commerce over the past 12 months. The Folgers brand gained 3 million new households at the height of the pandemic and had the highest repeat rate by new consumers during the holiday season. Further, our portfolio of brands gained more incremental households in the last year than any other manufacturer and has gained share in all channel consumption, inclusive of club and e-commerce.”
Sales rose 6.4% to $768.6 million in Smucker’s largest business unit, US Retail Pet Foods, up from $721.9 million a year ago. Segment profit, though, fell 7.5% to $135.1 million from $146 million in the same period a year ago. The decline primarily reflected an $8.1 million legal settlement related to a supplier issue received in the prior year. Excluding this prior year impact, Smucker said segment profit decreased $2.8 million, primarily due to the impact of lower net pricing and higher costs, partially offset by favorable volume/mix.
Smucker said its full-year net sales are expected to increase approximately 2% compared to the prior year, up from earlier forecasts of 0% to 1% growth. The increase primarily reflects elevated at-home consumption benefiting the US Retail Coffee and US Retail Consumer Foods segments, as well as a decline for the company’s Away From Home business, the lapping of a $185 million incremental benefit to net sales related to COVID-19 in the fourth quarter of the prior year, and $166 million of noncomparable sales in the prior year from the divested businesses.
Adjusted earnings per share guidance also was raised, to $8.70 to $8.90, up from an earlier forecast of $8.35 to $8.65.