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The J.M. Smucker (SJM) Pricing Actions & Coffee Business Solid
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Strategic pricing efforts and a strong coffee business is favoring The J. M. Smucker Company (SJM - Free Report) . The company is benefiting from robust performance in the Away from Home Division. Focus on Core Strategies bodes well amid elevated cost inflation and supply-chain challenges.
Let’s delve deeper.
Effective Pricing Drives Growth
The J. M. Smucker has been benefiting from positive net price realization, which was witnessed in the second quarter of fiscal 2023, with higher net price realization contributing 17 percentage points to the top-line growth. During the quarter, net sales growth was mainly backed by positive net price realization in the company segments. In the U.S. Retail Pet Foods segment, net price realization had a favorable 16-percentage point impact on net sales. The U.S. Retail Coffee net price realization boosted net sales by 23 percentage points. The net price realization had a nine-percentage point positive impact on sales in the U.S. Retail Consumer Foods. In the International and Away From Home unit, net price realization had a positive impact of 18 percentage points on overall net sales.
Management’s sales guidance for fiscal 2023 reflects the positive impacts of elevated net pricing to counter cost inflation in many categories. For fiscal 2023, SJM anticipates net sales to rise 5.5-6.5%. Excluding non-comparable sales related to the private label dry pet food and natural beverage and grain businesses’ divestitures, net sales are anticipated to improve by nearly 8% at the midpoint of the net sales guidance.
Image Source: Zacks Investment Research
Away from Home Division & Coffee Business Solid
The J. M. Smucker Company is benefiting from strength in the International and Away from Home division. This was witnessed in second-quarter fiscal 2023, with net sales advancing 14% to $297.9 million. Excluding divestitures and currency headwinds, net sales rose 19% for the Away from Home division, driven by double-digit growth for coffee and Uncrustables sandwiches. The segment’s profit climbed 3% to $41.5 million, mainly reflecting a favorable net impact of positive net price realization and higher commodity costs somewhat offset by lower contribution from volume/mix.
Talking of the coffee business, the overall coffee portfolio looks encouraging as at-home coffee remains strong, despite inflationary pressures given consumers’ daily coffee habits. In the coffee category, net sales grew 10% led by all brands in the market-leading at-home coffee portfolio during the second quarter of fiscal 2023. The company’s Café Bustelo and Folgers brands are doing well in the category.
Growth Efforts on Track
The J. M. Smucker is progressing well with core priorities, which include driving commercial excellence, reshaping portfolio, streamlining cost structure and unleashing its organization to win. Strength in such strategies is helping The J. M. Smucker navigate complex supply chain challenges. These are also helping the company improve in-store fundamentals and stock performance for the brands. The company is implementing inflation-justified pricing actions across all businesses. The company is committed to increasing its focus and resources to reshape its portfolio to achieve sustainable growth across pet food and pet snacks, coffee and snacking categories. To streamline costs, management has been optimizing its supply chain, lowering discretionary costs and expanding network production efficiencies.
Hurdles on Way
During second-quarter fiscal 2023, The J. M. Smucker’s gross profit dipped 1%. The lower gross profit was a result of higher commodity and ingredient, packaging, transportation and manufacturing costs, among other factors partly compensated by improved net price realization. The adjusted operating income fell 2% due to the reduced gross profit and higher selling, distribution and administrative (SD&A) costs.
On its quarterly earnings release, management stated that the ongoing cost inflation, a volatile supply chain and a broader macroeconomic landscape continue to affect the company’s results and cause risks for fiscal 2023. That being said, The J.M. Smucker remains focused on actions like minimizing the impacts of cost inflation, product recall and other business hurdles.
Shares of this Zacks Rank #3 (Hold) company have rallied 24.9% in the past six months compared to the industry’s growth of 14.8%.
The Chef's Warehouse, which distributes specialty food products, currently sports a Zacks Rank #1 (Strong Buy). Chef's Warehouse has a trailing four-quarter earnings surprise of 93.8%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for CHEF’s current financial year sales suggests growth of 46.5% from the year-ago reported number, while earnings indicate significant growth.
Conagra Brands, operating as a consumer-packaged goods food company, currently carries a Zacks Rank of 2 (Buy). CAG has a trailing four-quarter earnings surprise of 1.8% on average.
The Zacks Consensus Estimate for Conagra Brands’ current financial year sales and earnings suggests growth of 5.2% and 3.4%, respectively, from the corresponding year-ago reported figures.
McCormick, a manufacturer, marketer and distributor of spices, seasoning mixes and condiments, currently carries a Zacks Rank #2. MKC delivered an earnings surprise of 6.2% in the last reported quarter.
The Zacks Consensus Estimate for McCormick’s current financial-year sales suggests growth of 1.8%from the year-ago reported figure.
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The J.M. Smucker (SJM) Pricing Actions & Coffee Business Solid
Strategic pricing efforts and a strong coffee business is favoring The J. M. Smucker Company (SJM - Free Report) . The company is benefiting from robust performance in the Away from Home Division. Focus on Core Strategies bodes well amid elevated cost inflation and supply-chain challenges.
Let’s delve deeper.
Effective Pricing Drives Growth
The J. M. Smucker has been benefiting from positive net price realization, which was witnessed in the second quarter of fiscal 2023, with higher net price realization contributing 17 percentage points to the top-line growth. During the quarter, net sales growth was mainly backed by positive net price realization in the company segments. In the U.S. Retail Pet Foods segment, net price realization had a favorable 16-percentage point impact on net sales. The U.S. Retail Coffee net price realization boosted net sales by 23 percentage points. The net price realization had a nine-percentage point positive impact on sales in the U.S. Retail Consumer Foods. In the International and Away From Home unit, net price realization had a positive impact of 18 percentage points on overall net sales.
Management’s sales guidance for fiscal 2023 reflects the positive impacts of elevated net pricing to counter cost inflation in many categories. For fiscal 2023, SJM anticipates net sales to rise 5.5-6.5%. Excluding non-comparable sales related to the private label dry pet food and natural beverage and grain businesses’ divestitures, net sales are anticipated to improve by nearly 8% at the midpoint of the net sales guidance.
Image Source: Zacks Investment Research
Away from Home Division & Coffee Business Solid
The J. M. Smucker Company is benefiting from strength in the International and Away from Home division. This was witnessed in second-quarter fiscal 2023, with net sales advancing 14% to $297.9 million. Excluding divestitures and currency headwinds, net sales rose 19% for the Away from Home division, driven by double-digit growth for coffee and Uncrustables sandwiches. The segment’s profit climbed 3% to $41.5 million, mainly reflecting a favorable net impact of positive net price realization and higher commodity costs somewhat offset by lower contribution from volume/mix.
Talking of the coffee business, the overall coffee portfolio looks encouraging as at-home coffee remains strong, despite inflationary pressures given consumers’ daily coffee habits. In the coffee category, net sales grew 10% led by all brands in the market-leading at-home coffee portfolio during the second quarter of fiscal 2023. The company’s Café Bustelo and Folgers brands are doing well in the category.
Growth Efforts on Track
The J. M. Smucker is progressing well with core priorities, which include driving commercial excellence, reshaping portfolio, streamlining cost structure and unleashing its organization to win. Strength in such strategies is helping The J. M. Smucker navigate complex supply chain challenges. These are also helping the company improve in-store fundamentals and stock performance for the brands. The company is implementing inflation-justified pricing actions across all businesses. The company is committed to increasing its focus and resources to reshape its portfolio to achieve sustainable growth across pet food and pet snacks, coffee and snacking categories. To streamline costs, management has been optimizing its supply chain, lowering discretionary costs and expanding network production efficiencies.
Hurdles on Way
During second-quarter fiscal 2023, The J. M. Smucker’s gross profit dipped 1%. The lower gross profit was a result of higher commodity and ingredient, packaging, transportation and manufacturing costs, among other factors partly compensated by improved net price realization. The adjusted operating income fell 2% due to the reduced gross profit and higher selling, distribution and administrative (SD&A) costs.
On its quarterly earnings release, management stated that the ongoing cost inflation, a volatile supply chain and a broader macroeconomic landscape continue to affect the company’s results and cause risks for fiscal 2023. That being said, The J.M. Smucker remains focused on actions like minimizing the impacts of cost inflation, product recall and other business hurdles.
Shares of this Zacks Rank #3 (Hold) company have rallied 24.9% in the past six months compared to the industry’s growth of 14.8%.
3 Solid Staple Picks
Some top-ranked stocks are The Chef's Warehouse (CHEF - Free Report) , Conagra Brands (CAG - Free Report) and McCormick & Company (MKC - Free Report) .
The Chef's Warehouse, which distributes specialty food products, currently sports a Zacks Rank #1 (Strong Buy). Chef's Warehouse has a trailing four-quarter earnings surprise of 93.8%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for CHEF’s current financial year sales suggests growth of 46.5% from the year-ago reported number, while earnings indicate significant growth.
Conagra Brands, operating as a consumer-packaged goods food company, currently carries a Zacks Rank of 2 (Buy). CAG has a trailing four-quarter earnings surprise of 1.8% on average.
The Zacks Consensus Estimate for Conagra Brands’ current financial year sales and earnings suggests growth of 5.2% and 3.4%, respectively, from the corresponding year-ago reported figures.
McCormick, a manufacturer, marketer and distributor of spices, seasoning mixes and condiments, currently carries a Zacks Rank #2. MKC delivered an earnings surprise of 6.2% in the last reported quarter.
The Zacks Consensus Estimate for McCormick’s current financial-year sales suggests growth of 1.8%from the year-ago reported figure.