PENNSAUKEN, NJ. — Surging sales of core products such as soft pretzels, churros, bakery products and frozen beverages helped lift fourth-quarter sales 28% at J&J Snack Foods Corp. Signaling a recovery from the steep drop the company sustained in fiscal 2020, sales and earnings for the year ended Sept. 25 were up sharply from a year earlier.

“We are pleased with the strong finish to the year and the positive trends we see across our business, including exceeding pre-Covid sales levels in the fourth quarter despite an incredibly challenging operating environment,” said Dan Fachner, president and chief executive officer. “While fiscal 2019 was one of our strongest years, our net sales for Q4 ‘21 increased 4%, compared to the same period in fiscal 2019, driven by a 6% increase in our Food Service segment and 29% growth in our Retail segment as traffic across many of our customers’ venues and outlets continues to rebound. Our Frozen Beverages segment also continues to improve, with sales down 12% in the fourth quarter, compared to fiscal 2019, which also reflects quarterly sequential momentum from this segment relative to the comparison between Q3 ‘21 and Q3 ‘19. Despite the marked variance between channels experiencing recoveries such as restaurant, amusement, retail and convenience, and slower recovery channels such as theaters, the team is doing a great job balancing initiatives to drive growth and create more effective and efficient operational processes.”

J&J Snack Foods net income in the year ended Sept. 25 was $55.607 million, equal to $2.91 per share on the common stock, up 204% from $18.305 million, or 97¢ per share, in fiscal 2020. Net sales were $1.145 billion, up 12% from $1.022 billion.

In the fourth quarter, the company’s net income was $18.875 million, equal to 99¢ per share, up 187% from $6.584 million, or 35¢. Net sales were $323 million, up 28% from $253 million.

Fiscal 2020 results included impairment charges for the year of $6.4 million and for the fourth quarter of $1.315 million.

Fueling fourth-quarter growth in the Food Service segment, customer venues spanning sports, amusement parks, convenience stores, schools and restaurants have been experiencing a surge in post-pandemic demand driving strong sales in the company’s core products, the company said. Soft pretzel sales were up 62%, to $54.6 million, and churro sales grew 121% to $18.6 million. The latter jump was attributed to customer expansion and growing menu penetration. Bakery sales growth was 10% to $85 million. Operating income was $9.3 million, versus a loss of $1.3 million the same period a year earlier.

“Sales of new products increased to $5.5 million led by the introduction of chicken bake items and to a lesser degree by a new cookie product under the Honolulu Cookie Company brand,” the company said.

In a Nov. 15 call with investment analysts, Mr. Fachner offered details about the recovery of business channels hard hit during the pandemic.

“While foot traffic continues to recover to pre-pandemic levels, many of our customers are seeing higher food and beverage spending per person, which would lead to higher average transactions or an even stronger appeal for many of our portable products that are easy to enjoy on the go,” he said. “Overall, strong consumer spending should continue to benefit many of our key customer segments in 2022. As a result, we feel good about where we are and where we are headed in the Food Service segment and expect these positive trends to continue into the new year.”

In contrast with Food Service, the company’s Retail segment sustained a 9% drop in sales in the fourth quarter. Soft pretzel sales were down 1% versus the fourth quarter of 2020 but were almost double compared with the final quarter of fiscal 2019. Operating income was $5.7 million, down from $8.7 million a year earlier.

During the call, Mr. Fachner noted that rising supply chain costs, including higher commodity prices, logistics and wage inflation have been adversely affecting margins.

“In particular, we are seeing double-digit cost increases in ingredients such as oils, sweeteners and flour, while shipping costs continue their unprecedented escalation driven by diesel prices, carrier charges and a worsening driver shortage,” Mr. Fachner said.

He said the company has taken numerous pricing actions which, in combination with cost savings initiatives, “will help drive margin improvements as the impact of these operational pressures and the benefits of our actions align.”

In early trading Nov. 16, J&J Snack Foods shares fell $3.51, or 2.5%, to $153.47 per share.