J.M. Smucker’s pet food segment’s net sales increased US$62.0 million, or 9%, in the third quarter of fiscal year 2023 which ended January 31. U.S. retail pet food sales for Smucker reached US$758.6 million, up from US696.6 million in the third quarter of FY22. Pet segment profits were US$109 million with a profit margin of 14.4%.
Excluding US$9.4 million of noncomparable net sales in the prior year related to the divested private label dry pet food business, Smucker’s net sales increased US$71.4 million, or 10%. Higher net price realization increased net sales by 16 percentage points, primarily reflecting list price increases across the portfolio. Volume/mix decreased net sales by 5 percentage points, primarily driven by cat food and dog snacks.
Segment profit increased US$13.3 million, primarily reflecting a favorable net impact of higher net price realization and increased commodity and ingredient, manufacturing, and packaging costs, partially offset by increased marketing investment and the reduced contribution from volume/mix.
Considering all three quarters of FY23, Smucker’s pet segment net sales were US$2,252.8 million with a net profit of US$349.4 million.
Smucker sells off Nutrish, 9Lives, other pet food brands
In February, Smucker executives announced plans to sell several pet food brands to Post Holdings, a consumer-packaged goods holding company headquartered in St. Louis, Missouri, USA. The transaction included 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. Smucker expects these brands to generate net sales of approximately US$1.5 billion for the fiscal year ended April 30, 2023.
"This divestiture supports our strategy to prioritize investments and resources in the areas of our business that offer the strongest growth and profit potential. In our pet business this is reflected in our focus on dog snacks and cat food, anchored by our Milk-Bone and Meow Mix brands, respectively," Mark Smucker, president and CEO of J.M. Smucker, said in a press release.
