ORRVILLE, Ohio — The J.M. Smucker Company on Aug. 27 reported losses in net sales, gross profit, earnings per share and cash from operations after a tough first quarter of fiscal 2020.

Overall, the company reported $1.78 billion in revenue for the first quarter of fiscal 2020, down 6% compared to $1.9 billion in the first quarter of fiscal 2019.

The company attributed its shortcomings in part to the divestiture of its US baking business in August 2018, which accounted for $73.1 million of the total $123.6 million loss in net sales, among other factors.

"Our first quarter performance fell short of our expectations primarily due to the timing of shipments and deflationary pricing in the coffee and peanut butter categories, as well as competitive activity in the premium dog food category," said CEO Mark Smucker.

Considering a $25.4 million contribution from Smucker’s acquisition of Ainsworth, the company’s revenue still decreased 4% from year-ago net sales.

Adjusted earnings per share also decreased over the quarter by 11% to $1.58 compared to $1.78 in the first quarter of fiscal 2019. 

All four of Smuckers’ product categories, including pet foods, retail coffee, retail consumer foods, and international and away from home segments, experienced declines in revenue compared to year-ago net sales, with its retail consumer foods suffering the largest decline in revenue down 16.8%.

In an earnings call with investors on the morning of Aug. 27, Smucker began by saying, “Given the momentum we generated in the past two quarters, the miss relative to our expectations in this first quarter is unacceptable, particularly as it relates to our top line sales.”

Pet food remains the company’s largest product category in terms of net sales, although revenue fell $1.3 million from the previous year.

“Momentum for the majority of our pet brands continues to be masked by the decline in our private label business and the Natural Balance brand in the pet specialty channel,” Smucker said.

Smucker explained pricing competition from premium competitors caused the company’s Nutrish dog food brand to underperform in the first quarter.

“While we anticipate continued softness for the Nutrish brand in the second quarter, we remain confident in the strength of the brand as a key growth driver for the balance of the fiscal year, including the launch of new innovation platforms,” he said.

Cat food, on the other hand, drove positive sales growth, including an 8% growth for the Meow Mix brand, as well as growth for 9Lives and Nutrish cat food products.

Smucker’s dog treat segment is also growing steadily, with brands such as Pup-Peroni, Nutrish and Milk Bone driving sales.

Smucker added that the segment will be supplemented by product innovation throughout the remainder of fiscal 2020. “Pet innovation delivered over $20 million in net sales during the quarter, and we also continue to project $100 million in annualized sales for new products launched by the end of the year,” he said.

The company adjusted its full-year guidance to reflect this first quarter, aiming its adjusted earnings per share between $8.35 and $8.55 by April 30, 2020, representing a decrease of 10 cents from Smucker’s previous guidance set in June.

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