PENNSAUKEN, NJ. — While the impacts of COVID-19 on J&J Snack Foods Corp.’s business continue to linger, the maker of soft pretzels, churros and frozen beverages is beginning to see positive momentum in the business, said Daniel Fachner, president.
“The environment is changing as more venues are opening, capacity restraints are being lifted, more people are getting the vaccine and overall consumer confidence is improving every month,” Mr. Fachner told analysts during an April 27 conference call to discuss second-quarter results.
Net income at J&J Snack Foods in the second quarter ended March 27 totaled $6.06 million, equal to 32¢ per share on the common stock, down 17% from $7.31 million, or 39¢ per share, in the same period a year ago. Net sales eased 6% to $256.18 million from $272.04 million.
“Sales improved throughout the quarter, led by venue openings, accessibility to COVID-19 vaccine, improving consumer confidence and the spring season,” Mr. Fachner said. “Both our foodservice and frozen beverages businesses improved substantially during the quarter due to these improving consumer trends.”
Foodservice operating income at J&J Snack Foods fell 24% in the second quarter to $6.06 million from $7.95 million. Sales decreased 1.2% to $169.32 million from $171.33 million. Within the foodservice division, sales of bakery products were $82.91 million, down 7.3% from the same quarter a year ago, while sales of churros were essentially flat at $14.72 million. Sales of soft pretzels decreased 20% to $36.78 million. Sales of handhelds, meanwhile, jumped 168% to $19.99 million in the quarter.
“Traffic continues to improve as theaters are reopening, entertainment and amusement venues increase capacity and strong growth across QSR and casual dining restaurants,” Mr. Fachner said.
In the retail supermarket segment in the second quarter, operating income was $6.36 million, up 47% from $4.34 million in the previous year’s second quarter. Sales increased nearly 17% to $43.91 million from $37.57 million. Within the retail supermarket segment, sales of soft pretzels rose 28% to $15.79 million. Sales of frozen juices and ices increased 22% to $19.39 million, but sales of biscuits fell 2.1% to $6.5 million, and sales of handheld items dropped 28% to $2.24 million.
In the frozen beverages segment, J&J Snack sustained an operating loss of $5.19 million, which compared with a loss of $1.31 million in the same period a year ago. Sales decreased 32% to $42.95 million.
With almost exactly a year under his belt as president of J&J Snack Foods, Mr. Fachner was asked by an analyst to survey the business and provide insight on the company’s future direction.
“Well, as you know, this has been a great business for a long time,” Mr. Fachner said. “And so coming into it with some fresh eyes, (we’ve been) able to do some new and exciting things as well. I think I mentioned this to you once before. We have now hired on a new CMO (Lynwood Mallard) who had 22 years of experience with Coca-Cola, and he’s come in with some fresh ideas around marketing. And we’re looking at ways to kind of do a brand stretch with both our Icee and SuperPretezel brands, finding ways to expand those strong brands out and sales-wise.
“On the operations side, we’re doing some exciting things there. We’re looking at distribution centers, and we’re looking at transportation and ways to do that maybe a little bit different. We have organized the procurement group and the R&D in alignment in ways that we think that there might be some cost savings there, but also some efficiencies. We’ve got some really great growth going in the sales side, some really tremendous energy going around that.”
He also noted that J&J Snack is “picking up every rock” to try and uncover sales opportunities. To that end, the company recently diversified the Icee business outside of theater groups, with the frozen beverage now available at both Golden Corral and a quick-service restaurant chain in the Southeast United States.
Companywide, net earnings for the six-month period ended March 27 were $7.84 million, or 41¢ per share, down 68% from $24.37 million, or $1.29 per share, in the same time of the previous year. Six-month net sales decreased 10.5% to $497.18 million from $554.94 million.