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Folgers coffee, as the jingle goes, aims to be the “best part of waking up”. But its maker, consumer and pet-food giant JM Smucker, saw its shares fall more than 4 per cent Friday morning after reporting that net sales had decreased 5 per cent over the past quarter thanks in part to consumers’ waning interest in starting their day with the instant-java product.
JM Smucker — which also makes well-known food brands including Smuckers’ fruit spreads, Pillsbury dough and pet foods like Meow Mix and Kibbles ‘n Bits — saw its results for the quarter ending January 31 largely fall short of analysts’ expectations.
For the past quarter, earnings per share came in at $1.16, compared to the $1.62 seen by analysts surveyed by Bloomberg. Net income was $134.6m, versus expectations of $186.2m, thanks in part to a charge taken in connection with trademarks in its pet-food business, as well as an unfavorable comparison to its divestiture last year of its canned-milk business. Revenue came in at $1.88bn, just shy of the $1.9bn predicted.
The company blamed falling sales in part on its US retail coffee business, which fell 7 per cent year-on-year. The decline in Folgers was partly offset by an increase in sales of Dunkin’ Donuts coffee — a brand associated with the doughnut-and-java chain, which Smucker licenses — and Cafe Bustello, according to the company. Folgers’ fading fortunes come as US consumers are increasingly likely to trade off the convenience factor in their daily cup of coffee for a better-quality brew.
The company said it expects the slump seen in the third quarter of its fiscal 2017 to continue, and accordingly tweaked its full-year guidance lower. It now sees comparable net sales declining 3 per cent for the full year, as opposed to its previous projections of flat-to-1-per cent lower, and lowered the top end of its adjusted earnings per share guidance to $7.60-$7.70, compared to the previous range of $7.60-$7.75.
“Accelerating the realisation of synergies and a concentrated effort to reduce costs across the company support our ability to deliver bottom-line growth, despite the top-line softness in our business and across the industry,” said chief executive Mark Smucker, adding that the company remained confident in its long-term prospects thanks to growth opportunities it is pursuing.
The company’s shares have risen 3.6 per cent over the past 12 months.