Blog

Apr 09, 2023

Smucker sales up 11% in Q4 FY23, forecasts dog treats growth

Pet food and treat segment profit increased 21% to reach US$24.8 million. Net

Pet food and treat segment profit increased 21% to reach US$24.8 million.

Net sales increased US$67.2 million, or 9%, for J.M. Smucker's pet food division compared to the same quarter in fiscal year 2022. That figure rises to $79.2 million, or an 11% increase, when one excludes US$12.0 million of noncomparable net sales related to Smucker's sale of Rachael Ray Nutrish, 9Lives, Kibbles 'n Bits, Nature's Recipe, and Gravy Train brands as well as the Smucker's private label pet food business. Higher net price realization increased net sales by 12 percentage points, primarily reflecting list price increases across Smucker's portfolio. A reduced contribution from volume/mix decreased net sales by 1 percentage point, primarily driven by cat food and partially offset by dog food and dog snacks. Pet food and treat segment profit increased 21% to reach US$24.8 million.

"During the quarter, we made meaningful progress in our effort to reshape our portfolio with the completion of the divestiture of certain pet food brands, while also returning significant cash to our shareholders," Mark Smucker, president and CEO of J.M. Smucker said in a press release.

"Dog snacks growth was led by the Milk-Bone brand, which grew net sales 20%," Smucker said during the company's June 6 earnings call. "This growth reflects the benefits of higher net pricing, to recover increased costs, and volume growth. The Milk-Bone brand continues to drive growth for our market-leading dog snacks business, and the category overall, through core offerings and premium positioned innovation. Milk-Bone continued to significantly outpace the category, growing over 1.5x the category rate, with consumer take-away up over 16% in the quarter.

"In cat food, momentum for the Meow Mix brand continued as net sales grew 7%. This reflects another strong quarter for the brand, with year-over-year net sales growth in 21 of the last 22 quarters. Demand continued to exceed our production capacity in the quarter. We are investing in infrastructure and labor to improve efficiencies and increase throughput for the long-term. We expect improvement in supply catching up to demand through the first half of the new fiscal year.

"In dog food, momentum continued, as comparable net sales grew 13%. We completed the divestiture of certain pet food brands at the end of the quarter, and our pet business has shifted from approximately two-thirds pet food and one-third pet snacks, to approximately 60% pet snacks and 40% cat food. This shift will significantly improve our profit margin and product mix over time. This enables us to allocate more resources and increase investments in the fast-growing and high-margin dog snacks category. We expect to grow our dog snacks portfolio to US$1 billion in annual net sales over the next several years.

Earlier this year, J.M. Smucker sold several pet food and treat brands to Post Holdings, a consumer-packaged goods holding company headquartered in St. Louis, Missouri, USA. The transaction includes the Rachael Ray Nutrish, 9Lives, Kibbles 'n Bits, Nature's Recipe, and Gravy Train brands as well as the Smucker's private label pet food business.

Smucker's sale of these brands is valued at approximately US$1.2 billion, consisting of US$700 million in cash and approximately 5.39 million shares of common stock of Post Holdings, Inc.

The deal includes relevant trademarks and licenses, and manufacturing and distribution facilities in Bloomsburg, Pennsylvania, USA as well as its manufacturing facilities in Meadville, Pennsylvania and Lawrence, Kansas, USA. In addition, a group of employees will transition to Post Holdings, Inc. to support the business.