Results in the first quarter of fiscal year 2021 exceeded J.M. Smucker executive’s expectations, and pet food and treat brands contributed to that performance. Smucker pet segment net sales reached US$692.6 million in Q1 FY21, a year-over-year change of 3%. Pet food and treat segment profit stood at US$125.3 million, a 4% change over last year. Smucker’s pet segment profit margin was 18%.
Smucker dog and cat food sales in Q1 FY21
“Cat achieved 13% growth, led by the Nine Lives and Meow Mix brands,” Mark Smucker, chief executive officer, said during J.M. Smucker’s Q1 FY21 earnings call. “Dog snacks grew 9% led by growth for Milkbone and Pupperoni. While still relatively small, cat snacks increased over 20%, driven by the Nutrish brand.”
“Dog food sales decreased mid-single digits, driven by declines for the Natural Balance and Nature's Recipe brands and private label dog food, slightly offset by growth for the Kibbles 'n' Bits brand,” he said. “Nutrish dog food sales were down slightly due to lower pricing. Pet food segment profit increased 4% compared to the prior year, driven by lower costs related to manufacturing increased volume mix and reduced marketing and selling expenses, partially offset by increased promotional activity.”
Smucker sales influenced by pandemic sales
Smucker pet food and treat sales followed a similar trajectory to many other brands during the first half of 2020, as pandemic-related movement restrictions rapidly altered established buying patterns. During the earnings call, one Smucker executive answered a question about how the COVID-19 pandemic affected the company’s pet food and treat brands. The questioner asked if Smucker’s pet brands experienced reduced retailer inventories after the initial surge in sales.
“We did anticipate that there would be some destocking within pet,” Tucker Marshall, chief financial officer, said. “The answer the question is yes. However, it came later in the quarter, the month of May was a particularly strong month for us as it relates to our pet food business across both cat, snack and dog. It began to moderate across all three as the quarter went on and will continue to moderate into the second quarter, but big picture the destock did occur.”
Smucker said that the pet specialty channel continues to exhibit some softness. Consumers seem to be generally shifting to e-commerce. In response to a question, he estimated that roughly 15-20% of Smucker’s pet food and treat sales are now online, depending on the specific category.
“To build on Tucker's comment, the total dog category was actually down in the quarter, largely because of the destock.” Smucker said. “That's the first time in a very long time that you would see the dog food category, having been down… We do view that… we're largely through much of that.”
Nevertheless, Smucker’s total pet business is up, he said.
“We've seen great growth in both cat and pet snacks,” he said. “So that has clearly been a positive, as well as performance for our innovation.”
