Latest news with #JMSmucker
Yahoo
11 hours ago
- Business
- Yahoo
Sweet snacks leave bitter taste at JM Smucker
JM Smucker's eye-catching move for Twinkies owner Hostess Brands in 2023 divided opinion, with some concerns on Wall Street about the US manufacturer's big bet on sweet snacks. It's clear the $5.6bn deal has turned a little sour. The company, home to brands Uncrustables frozen sandwiches and Café Bustelo coffee, made a big bet on indulgence two years ago with its move for Hostess and its portfolio of brands like Twinkies, Ding Dongs and Voortman Bakery. However, the latest results filing from JM Smucker, published earlier this week, underlines the transaction has proved a little hard to digest. The deal was 'a compelling expansion of our family of brands', chair and CEO Mark Smucker said when the move for Hostess was announced. However, among analysts there was some disquiet about such a significant foray into less-healthy snacks amid growing signs of increased interest in better-for-you options. 'There are multiple ways that consumers will continue to snack,' Mr Smucker told analysts when the transaction was announced. And, of course, he's right – but perhaps more punters are now choosing the indulgent option less often – and, when they do, looking for different brands, be they pricier or, simply, more current or contemporary than a Twinkies. JM Smucker's acquisition of Hostess Brands was finalised in November 2023 and, in a matter of months, the company was reporting its new Sweet Baked Snacks unit was performing below expectations. Last August, when the group filed its first-quarter results for its 2024/25 fiscal year, the company blamed a 'cautious consumer' for weighing on sales at its sweet baked snacks and pet-food businesses. The Q1 numbers led JM Smucker to lower its annual net sales and adjusted EPS forecasts. In October, JM Smucker surprised some industry watchers with a move to sell part of the Hostess business. US-based snacks maker Second Nature Brands snapped up the Voortman cookies brand in an all-cash deal valued at $305m. TD Cowen analyst Robert Moskow, who covers the publicly listed JM Smucker, said at the time the sale of Voortman cookies was 'disappointing', pointing out the company had sold the brand for less than Hostess had paid. Fast-forward to March this year and a clear sign of problems within JM Smucker's sweet-snacks business emerged with the recording of goodwill impairment charges of more than $1bn linked to the division. The charges were posted alongside the publication of the group's fiscal third-quarter results, a period when the sales JM Smucker generated from its Sweet Baked Snacks division fell 7%. Two months later, the company announced it would close a manufacturing facility in Indiana as part of the 'continued optimisation' of its Sweet Baked Snacks unit. And, on Tuesday this week, a fresh round of impairment charges of $980m were booked against the sweet-snacks business. Speaking to analysts after the charges – and JM Smucker's fourth-quarter numbers were announced – Mark Smucker said the company had cut its 'long-term' expectations for the sales growth it expects to derive from the sweet-snacks unit. JM Smucker is now forecasting sales from its Sweet Baked Snacks business will rise 3% a year, down from an earlier projection of 4% growth. 'We are also refining our strategy and taking a more focused approach for this business. By narrowing our priorities to three key drivers, we will accelerate the stabilisation and eventual growth of the Hostess brand,' Mr Smucker said. He explained JM Smucker would review its snacks product ranges and 'improve competitiveness through key price points'. The company plans to 'streamline commercial processes and redeploy resources', he added, moves that will include setting up a 'dedicated' sales team for sweet snacks. Moves to 'rebuild the margin profile' of the division will take in 'a streamlined bakery footprint', which Mr Smucker said includes the closure in Indiana. 'We are taking decisive actions to improve the results of our Sweet Baked Snacks segment, which has not met our expectations,' he said. US consumers are still 'selective in their spending' and 'discretionary income' has been hit but the JM Smucker CEO added: 'We did not perform with excellence from a distribution, merchandising and competitive standpoint.' It's important to note there are parts of JM Smucker's portfolio that are seeing growth. Bernstein analyst Alexia Howard said the performance of the company's portfolio 'is a very mixed bag at present'. Away from the challenges in sweet snacks, the group is enjoying rising sales from Uncrustables (which Howard described as 'stoically solid') while fourth-quarter coffee sales jumped 11% (although ten points of that growth came from price increases; elasticity will be worth watching here as JM Smucker prepares another price increase). Over at Morgan Stanley, analyst Megan Clapp said the 1% fall in JM Smucker's fourth-quarter organic sales (versus Wall Street estimates of 1.1% growth) was 'surprising' and the company's forecast for 2025/26 adjusted EPS 'disappointing'. 'However, taking a step back, JM Smucker's underlying organic sales growth is well-above recent centre-store peers results and we think the gap should continue to widen given building scanner data momentum on both a one-year and two-year basis,' Clapp says. 'Moreover, the majority of the anticipated year-on-year EPS decline is driven by coffee inflation where JM Smucker's embedded elasticity and margin assumptions appear conservative to us. Our enthusiasm is somewhat tempered by limited visibility to a Hostess recovery, though we find some comfort that the guide also includes incremental marketing investments in Cafe Bustelo and Uncrustables.' Nevertheless, after such an outlay to expand in sweet snacks via M&A, the pressure on sales and the company's move to dampen down expectations about the division's prospects, that side of JM Smucker's portfolio will remain firmly in the spotlight. 'Our concerns about the struggling Hostess acquisition continue to multiply after a 70% profit decline in the quarter and another impairment charge of almost $1bn,' Moskow said in a note to clients this week. 'Our sense is that the operational complexities of this display-driven fresh bakery business will continue to perplex Smucker's management team in fiscal year 2026 and that the guidance for sales to stabilize in the second half will prove overly optimistic. Expectations for growth to return to 3% by fiscal year 2028 also appear aggressive given structural headwinds from GLP-1s.' And therein lies the rub. Just what is the outlook for a sweet-snacks business containing brands like Twinkies and Cup Cakes? 'Clearly the impairment charge and reduction in expected long-term top-line growth from 4-7% previously to 3% for the Hostess business reflects the challenges this business faces, but we wonder whether the management team has gone far enough here given headwinds from GLP-1 weight-loss drug uptake as well as RFK Jr.'s efforts to Make America Healthy Again by seemingly starting a crusade against ultra-processed foods,' Howard says. "Sweet snacks leave bitter taste at JM Smucker" was originally created and published by Just Food, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
2 days ago
- Business
- Yahoo
JM Smucker outlines snacks strategy after fresh impairments
JM Smucker is "narrowing our priorities" for its sweet snacks division after the Twinkies maker booked another set of impairments against the business. The US manufacturer yesterday (10 June) recorded impairment charges of $980m made up of $867.3m linked to goodwill in its sweet baked snacks unit and a $112.7m impairment tied to the Hostess brand. The company, which acquired US snacks maker Hostess Brands in a $5.6bn deal two years ago, recorded over $1bn in impairment charges for the same units in March. After announcing JM Smucker's annual results yesterday, CEO and chair Mark Smucker, acknowledged the performance of the sweet baked snacks business had fallen short of 'expectations'. The chief pointed to inflation-driven shifts in consumer behaviour, noting reduced discretionary income led to more 'selective' spending. He also conceded the company had been unable to 'perform with excellence from a distribution, merchandising, and competitive standpoint'. The company, Mr Smucker said, is refocusing its efforts around 'three key drivers' in a bid to speed up the 'stabilisation and eventual growth' of the Hostess brand. He explained JM Smucker would review its snacks product ranges and "improve competitiveness through key price points". The company plans to "streamline commercial processes and redeploy resources", he added, moves that will include setting up a "dedicated" sales team for sweet snacks. JM Smucker is now forecasting sales from its sweet baked snacks business will rise 3% a year over the "long term", down from an earlier projection of 4% growth. The impairment charges resulted in a fourth-quarter operating loss of $599.1m, contrasting with a $406m operating profit in the corresponding period of the previous year. The company posted a net loss of $729m in the fourth quarter, versus a $245.1m profit a year earlier. Fourth-quarter net sales decreased by 3% to $2.14bn. Adjusted operating income was $422.4m, an 8% decline, with adjusted EPS at $2.31, down from $2.66 in Q4 FY2024. For the full year, JM Smucker reported a net loss of $1.23bn, compared to a $744m profit in its 2024/2025 fiscal year. Net sales rose 7% to $8.72bn, but the company recorded a $673.9m operating loss, a drop from $1.31bn in operating income in the previous fiscal year. Adjusted operating income increased by 12% to $1.82bn, with adjusted EPS rising to $10.12 from $9.94. Looking ahead, JM Smucker expects company-wide net sales to grow 2-4% in fiscal 2026 and anticipates adjusted EPS between $8.50 and $9.50. Announcing the results, Mr Smucker said: 'As we look ahead to fiscal year 2026, we remain focused on delivering the business through the strength of our key growth platforms and advancing our strategic priorities. We are confident in our strategy, and we are well-positioned to deliver long-term growth and increase shareholder value.' In a note, Bernstein analyst Alexia Howard said JM Smucker's outlook is 'below consensus on the bottom line, although sales guidance is better than expected due to price hikes,' particularly in coffee, where another increase is planned for August. Looking ahead to the company's 2026 fiscal year, Howard expressed concern that 'pressures on the Hostess brand will continue to play out, particularly once pill versions of GLP-1 drugs are launched in calendar year 2026'. She also flagged potential pressure on sales from state-level reductions in Supplemental Nutrition Assistance Program funding and ongoing media scrutiny of highly processed foods. Overall, Howard described the performance across JM Smucker's business units, including retail pet foods, coffee, frozen handhelds, and spreads, as a 'very mixed bag at present'. "JM Smucker outlines snacks strategy after fresh impairments " was originally created and published by Just Food, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site.
Time of India
2 days ago
- Business
- Time of India
US stock market today: US-China tariff truce fails to calm Wall Street; Dow, S&P 500, Nasdaq edge lower ahead of opening session
US Stock Market: Wall Street futures slipped on Wednesday morning, even as the United States and China reached a broad consensus on advancing a trade deal after months of tit-for-tat tariffs. Tired of too many ads? go ad free now The agreement followed two days of high-level talks in London, building on earlier discussions in Geneva. Despite the positive steps in diplomacy, US market showed a muted reaction. Dow futures fell by 110 points, while S&P 500 futures dipped slightly below the flat line, and Nasdaq futures dropped 60 points. However on Tuesday, the major US indexes inched closer to record highs as talks between the world's two largest economies carried into a second day. S&P 500 rose 0.5% to 6,038.81, the Dow Jones Industrial Average gained 0.2% to 42,866.87, and the Nasdaq composite climbed 0.6% to 19,714.99, as investors kept a close eye on the ongoing US-China negotiations. Share prices had significantly recovered since falling approximately 20% below their record two months ago, following Donald Trump's unexpected announcement of severe tariffs that sparked recession concerns. The market's upward trajectory was largely driven by expectations that Trump would reduce tariffs after securing trade agreements globally, bringing the S&P 500 within 1.7% of its February record. "The talks with China were going 'really, really well,'" US secretary of commerce Howard Lutnick stated Tuesday evening in London, where negotiations were taking place. Both nations have suspended many of their announced tariffs during ongoing discussions. Tired of too many ads? go ad free now The late Tuesday agreement boosted Asian markets, with Hong Kong and Shanghai leading the gains, alongside positive performance in Tokyo, Sydney, Seoul, Wellington, Taipei and Manila. The US benchmark indices moved closer to their record highs on Tuesday, with the S&P 500 and Nasdaq outperforming, boosted by a third straight day of gains in Tesla, which has nearly erased its losses from June 4 and 5. Tesla shares jumped 5.7% to $326.09, climbing back above after last week's slump, which was partly triggered by tensions between Elon Musk and Donald Trump. Investor sentiment was further lifted after Musk announced that Tesla's long-awaited robotaxi service is "tentatively" set to launch in Austin on June 22. Meanwhile, J M Smucker saw its stock plunge 15.6% despite beating earnings estimates. Investors reacted to weaker-than-expected revenue and a disappointing profit outlook for the year ahead. On Tuesday, the World Bank lowered its global growth forecast for 2025 to 2.3%, down from 2.7% projected in January, citing ongoing trade tensions and economic uncertainty. It also cut the US growth forecast for 2025 to 1.4%, down sharply from the 2.8% growth expected in 2024.
Wall Street Journal
2 days ago
- Business
- Wall Street Journal
Optimism for U.S.-China Trade Talks Pushes Stocks Higher - Minute Briefing
Full Transcript This transcript was prepared by a transcription service. This version may not be in its final form and may be updated. Danny Lewis: Here's your closing bell brief for Tuesday, June 10th, I'm Danny Lewis for the Wall Street Journal. Stock indexes closed higher as U.S.-China trade talks continued for a second day. The Dow Jones Industrial Average gained 105 points to close at 42,867. The S&P 500 advanced 33 points and the NASDAQ rose 124 points. Commerce Secretary, Howard Lutnick told reporters that the negotiations with China are going, "Really, really well." He said he hoped the talks would end tonight, but they could continue into Wednesday if needed. Elsewhere, new survey data from the National Federation of Independent Business showed small firms are feeling less worried about tariffs, alongside hopes for a boost from President Trump's tax and spending bill. But the World Bank painted a less optimistic picture saying it expects the U.S. economy to grow just 1.4% this year, as a result of Trump's trade policies. In individual companies trading today, Tesla stock continued its rebound following last week's route, sparked by CEO Elon Musk's fallout with Trump. Shares climbed almost 6%. Shares of Taiwan Semiconductor rose 2.6% after the chip maker reported a 40% rise in revenue in May compared to last year. And stock in Folgers and Hostess Brands owner J.M. Smucker fell after it posted lower sales and swung to a $729 million loss in its latest quarter. Shares dropped nearly 16%. Also, people familiar with the matter, say Facebook parent Meta Platforms, is in advanced talks to invest about $14 billion into data labeling startup Scale AI. Its CEO, Alexandr Wang, would join Meta to help lead its artificial intelligence development. We'll have a lot more coverage of the day's news on the WSJ's, What's News podcast. You can add it to your playlist on your smart speaker or listen and subscribe wherever you get your podcasts.
Bloomberg
2 days ago
- Business
- Bloomberg
Stock Movers: JM Smucker, McDonalds, Novo Nordisk
On this episode of Stock Movers: - JM Smucker (SJM) shares fall after the company said it expects adjusted earnings of up to $9.50 a share, reduced by $1 a share due to higher coffee costs and US tariffs. The company raised coffee prices in May and plans to do so again in August, which is expected to hurt demand this year. -McDonalds (MCD) shares drop after Redburn Atlantic downgraded the company to a sell rating, citing concerns over shifting consumer patterns due to weight-loss drugs and inflation. The analyst estimates that the use of GLP-1 drugs like Ozempic could impact McDonald's revenue by $428 million annually, and potentially up to 10% or more over time. -Novo Nordisk (NOVOB) shares rise after a report that Parvus Asset Management has built a stake in the company. Parvus is interested in influencing the appointment of a new CEO, as Novo Nordisk is set to replace its current CEO Lars Fruergaard Jorgensen.
