PENNSAUKEN, NJ. — Churros could lead sales growth for J&J Snack Foods Corp. in the 2023 fiscal year.

“Churros is one of the fastest-growing snack categories in foodservice, and we couldn’t be more excited about our new churros brand, Hola Churros, launching this quarter, supported by a full suite of selling tools and videos,” said Dan Fachner, president and chief executive officer, in a Nov. 15 earnings call to discuss results for the fiscal year ended Sept. 24. “We look forward to reporting on the progress with this new brand in the coming quarters.”

He added Pennsauken-based J&J Snack Foods launched SuperPretzel Buffalo-flavored-filled bites in the fourth quarter ended Sept. 24 and will introduce SuperPretzel Bavarian sticks and pretzel nuts in fiscal 2023.

Net earnings of $47.2 million, equal to $2.47 per share on the common stock, for the fiscal year were down 15% from $55.6 million, or $2.92 per share, in the previous fiscal year. Net sales of $1.38 billion were up 21% from $1.14 billion. Operating expenses increased to 22.3% of sales, up from 19.9% in fiscal 2021. The increase reflected freight and distribution cost increases, wage increases and administrative cost hikes.

Foodservice sales increased 20% to $872.7 million, led by frozen novelties, churros, handhelds, pretzels and bakery. Frozen novelties benefited from the Dippin’ Dots acquisition. Retail sales grew 7% to $197.9 million, driven by soft pretzels and frozen novelties. Frozen beverage sales increased 32% to $310 million as more consumers visited amusement parks, live event venues, convenience stores, restaurants and retail venues.

In the fourth quarter, net earnings of $17.3 million, or 90¢ per share, were down 8% from $18.9 million, or 99¢ per share. Net sales increased 24% to $400.4 million, up 24%.

Foodservice sales in the quarter increased 29% to $256.7 million, which included $31.5 million in sales from Dippin’ Dots.

“Churros grew 38% for the quarter as we continue to focus on market opportunities and repositioning the brand for continued growth,” Mr. Fachner said. “Handhelds grew 44%, and bakery and soft pretzels delivered strong growth in the quarter.”

Fourth-quarter sales in the retail segment increased 11% to $53.5 million. Soft pretzel sales increased 30% while other sales increases were 26% for handhelds and 7% for frozen novelty. Frozen beverage sales in the quarter were $90.2 million, up 18%.

“All three of our segments (in the fourth quarter) grew above 2019, and we’ve used that kind of as the pre-COVID proxy, but it gives you just kind of a general idea that all three business segments are really performing well independent of adding Dippin’ Dots,” said Ken Plunk, chief financial officer.

Operating expenses in the fourth quarter increased to $94.2 million and represented 23.5% of sales, which compared with 20.6% in the previous year’s fourth quarter.

“These results largely reflect the inflationary pressures across all of our expense lines, in particular in distribution expenses,” Mr. Plunk said. “Distribution expenses were 12.4% of sales compared to 10.1% in fiscal 2021 but did improve compared to Q3 2022, which was 12.7%.”