Low pet food sales hurt Smucker’s earnings in Q1 2017

The lower sales were mostly driven by double-digit declines for Natural Balance in Kibbles ‘n Bits brands.

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(Andrea Gantz)
(Andrea Gantz)

Lower pet foods sales contributed to a first fiscal quarter overall net sales decrease of 5 percent for the J.M. Smucker Company compared to 2016, said Mark Smucker, president and CEO, in the companies’ earnings conference call on August 23.

“Net sales for our pet foods segment decreased 6 percent, reflecting unfavorable volume mix,” said Mark Belgya, vice chair and chief financial officer, in a transcript of the earnings call provided by SeekingAlpha. “The lower sales were mostly driven by double-digit declines for our Natural Balance in Kibbles ‘n Bits brands, mid single-digit declines from Meow Mix and 9Lives cat food also contributed.”

Smucker expected the soft pet food sales to continue in the near term. Pet food sales were below the company’s projections for the first quarter. Smucker has revised their full-year outlook downward accordingly.

Focus on mainstream brands  

The company has been working to improve the competitive positioning of Kibbles ‘n Bits, and will focus on mainstream dog and cat food brands for future growth, said Smucker. The packaging of Kibbles ‘n Bits will be revamped later this year, for example.

Sales of the premium pet food Natural Balance brand were also down, but Smucker noted that consumer takeaway for the brand remained strong. J.M. Smucker acquired Big Heart Pet Brands in 2015.

Silver lining in cat food and treats

Despite missing earnings forecasts, there were segments of the pet market that grew for Smucker.

“In the cat segment, we remain encouraged by the strong equity of the Meow Mix brand,” said Smucker. “With recent innovation, a new television advertising campaign that began this month and upcoming pricing support, we are confident in our ability to reverse recent softness in this business.”

Pet snacks sales were up by two percent on top of nine percent in 2015. Smucker pointed to the Milk-bone and Meow Mix brands as important components of their pet snack business. 

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