ORRVILLE, Ohio — Cat food and treats carried The J.M. Smucker Company’s pet food segment in the second quarter of its fiscal 2020, the company reported on Nov. 22. Net sales for the segment fell 2% over the quarter, totaling $709.9 million, while segment profit increased by 11% to $137 million.

The company reported its pet food segment sales were down by $18.2 million in the second quarter due to “greater than anticipated softness in the back half of the fiscal year.” This softness was attributed to its premium dog food products, namely its Natural Balance brand, which suffered a 25% decrease in sales over the quarter.

“The brand [Natural Balance] has been impacted by increased competitive offerings, continued growth of premium dog food in the grocery, mass and e-commerce channels and continued weakness in the pet specialty channel,” said Mark Smucker, president and CEO of the company.

Underwhelming sales growth for its Nutrish brand also impacted the segment’s revenue, and Smucker said the company expects “competitive headwinds in premium dog food to continue.”

"Despite continuing softness for our premium dog food offerings, we were pleased with the performance for the balance of our portfolio, as the momentum for our cat food and pet snacks businesses continued with year over year sales increases,” Smucker said.

Pet food segment profit increases over the quarter were attributed to “favorable net pricing, synergy realization and lower marketing expense,” according to Mark Belgya, vice chair and CFO of the company.

“We delivered growth for our largest brands in the portfolio, including Nutrish, Meow Mix and the Milk-Bone despite total segment growth being impacted by planned declines for private label products,” Smucker said.

Looking forward, Belgya added, “Private label pet food remains a headwind with approximately a $10 million decline expected in the third quarter.”

Despite a dismal sales performance, the company reported its eighth consecutive quarter of year-over-year sales growth across its cat food and treat portfolio, Smucker said. Cat products under its Meow Mix, 9Lives and Nutrish brands contributed to gains in household penetration.

“In the latest 52-week period, Meow Mix now has the highest household penetration of any brand in the dry cat food segment,” Smucker added.

Smucker’s pet food business still leads the pack in revenue, outpacing the company’s coffee segment by $166.5 million, consumer foods by $283.8 million, and its international and Away From Home business by $431.5 million in the second quarter.

“We remain confident in growth opportunities for the total pet business and with new leadership in place, we expect further refinements to our overall pet strategy which we will share over the coming quarters,” Smucker said.

The company announced Nov. 13 it was searching for a new leader for its pet food segment, as David Lemmon will no longer serve as its president going forward. Rob Ferguson, current senior vice president of pet food and pet snacks and supply chain, will serve as interim president in the meantime.

Jeff Watters, former president and CEO of Ainsworth Pet Nutrition, will take on a strategic advisor role to counsel Ferguson and the company’s pet category through this transition.

Additionally, Belgya announced his retirement effective Sept. 1, 2020, and will be succeeded by Tucker Marshall, currently the vice president of finance at Smucker’s.

Overall, Smucker’s reported a $63.7 million or 3% loss in revenue during the second quarter compared to year-ago sales, which was largely attributed to the company’s baking business divestiture that occurred Aug. 31, 2018. Excluding the baking divestiture and “unfavorable foreign currency exchange” costing the company another $1.8 million, Smucker’s net sales for the quarter decreased by $29.1 million or 1%.

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