ORRVILLE, Ohio – In a conference call on second quarter 2019 earnings, J.M. Smucker Company executives reported the company’s key growth brands, which include its pet segment, were up 12% in the second quarter of this fiscal year. The company’s pet foods segment achieved the highest growth of any other segment by far, up 32% from the second quarter of last fiscal year. Coffee achieved 1% year-over-year growth, the international segment grew 2% and consumer foods grew 12%. Overall however, Smucker’s revenue is down from $8 billion to $7.9 billion from the second quarter of last fiscal year.
Nutrish, a premium pet food brand acquired by Smucker’s following its $1.7 billion purchase of Ainsworth Pet Nutrition in April 2018, drew a 23% growth in sales from the previous year. Another premium pet brand, Nature’s Recipe, achieved 15% revenue growth over the same period. Meow Mix sales were up 8% from the previous year. Executives reported the growth in this brand was offset by the discontinuation of some Gravy Train products and the underperformance of its Natural Balance brand. Overall, dry cat food brands achieved double-digit sales growth, according to Mark Smucker, president and CEO of J.M. Smucker Company.
“We are well positioned for growth across all key segments of pet food and pet snacks, which is now the largest category in the center store, growing at over two times the total store average,” Mark said. “While sales of pet snacks were down slightly compared to the prior year, we are excited about the upcoming snacks innovation.”
E-commerce is looking up for the company’s top segments, coffee and pet food, which drove a 40% growth in e-sales this quarter. More than one-third of online sales of pet food and treats were subscription purchases, which indicates stable revenue for the future, according to Mark.
Regarding Petco’s recent rejection of artificial ingredients, David Lemmon, president of pet food and pet snacks for Smucker’s, estimated 8% of its sales through Petco could be from brands the retailer will no longer offer in 2019.
“I would say that we are going to offset all that and more through our innovation and new distribution launches that we have coming up later in the fiscal [year],” Lemmon said. “You can't discount our brand strength, and consumers will potentially leave the store and shop elsewhere for those brands that they know and love.”
Lemmon also said he does not believe Smucker’s will need to reformulate its pet products to stay on retail shelves, which was one incentive Petco had for brands that no longer met its standards. When questioned about this, Lemmon pointed out there is still a sizable customer base already buying products that do not meet Petco’s standards, and Smucker’s will “wait and see” how consumers react to this change.
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