ORRVILLE, OHIO — The J.M. Smucker Company saw a surge in demand from the COVID-19 pandemic, resulting in a successful fourth quarter and a better-than-expected financial outcome for its fiscal year 2020.

The company reported an uptick in e-commerce across the board, as well as growth for CPG brands in its coffee and retail foods businesses.

Overall, Mark Smucker, president and chief executive officer of The J.M. Smucker Company said he is proud of how the company has handled the public health crisis, saying, “We ensured our employee safety and well-being, supported the communities where we do business, maintained our product quality standards, and partnered with our suppliers and retailers to provide a steady supply of food for consumers and their pets.

"Our strong response is reflected in our exceptional fourth quarter results, with record-setting net sales and adjusted earnings per share,” he added. “This exceptional growth is a testament to the strength of our brands and consumer-centric strategy, as consumers turned to trusted products to stock their kitchens as stay-at-home orders were implemented across North America."

Pet food sales in the United States continue to be the company’s largest revenue stream, making up 37% of its total sales in fiscal 2020. The segment reported $767.8 million in net sales for the fourth quarter of fiscal 2020, representing a 6% increase from year-ago sales. For the fiscal year, however, pet food and snack sales declined 0.3%.

“For pet food, consumer takeaway reversed in April as pet parents began depleting the initial March stock-up purchases,” Smucker said during the company earnings call. “Consumption for pets generally did not increase, with the exception of some additional treating as pet parents spent more time at home.”

Within the company’s pet food and snacks business, dog food represents the majority of sales at 38%, followed by pet snacks at 29%, cat food at 28%, and private label manufacturing at 5%.

“Sales for dog snacks, led by the Milk-Bone brand grew 12% and cat food led by the Meow Mix brand, grew 19% with our cat food market share improving over a 0.5 point in the 13-week period and 2.5 points in April,” Smucker explained.

Sales of Natural Balance and Rachael Ray Nutrish brands declined but were offset by “strong growth” for the company’s value brands, Smucker said. Tucker Marshall, chief executive officer of The J.M. Smucker Company, explained sales for the company’s Kibbles ‘n Bits dog food brand increased by more than 20% over the quarter.

Natural Balance declines were attributed to a sudden decrease in foot traffic at pet specialty stores and a shift toward e-commerce.

Meow Mix and 9Lives carried the company’s cat food sales in the fourth quarter, both growing at approximately 20%, according to Marshall. Dog treat sales were also up 12%, supported by Milk-Bone and Pup-Peroni brands.

“Despite an uncertain economic recovery, our pet portfolio is uniquely positioned to perform well with a breadth of options to meet consumer needs across the full spectrum of value, mainstream, premium and super premium offerings,” Smucker said.

Smucker noted e-commerce sales among its pet segment products increased 60% in the fourth quarter.

“We anticipate no material ongoing changes to pet food demand from COVID-19 for the remainder of the year,” Marshall said. “The impact in away-from-home and pet is expected to be only partially offset by COVID related benefits for the balance of the business.”

Additionally, on June 2, the company officially appointed Rob Ferguson to lead its pet food and pet snacks business as senior vice president and general manager of that segment. He formerly served as interim president of the segment since November 2019, following former pet segment leader Dave Lemmon’s departure from the company.

Total fourth quarter revenue for The J.M. Smucker Company totaled $2.1 billion, up roughly 10% from year-ago sales. The company’s annual revenue was still down 0.5% from fiscal 2019 to fiscal 2020.

In February, The J.M. Smucker Company raised its fiscal 2020 outlook from a net sales loss of 3% to 1% as a result of the unanticipated surge in demand caused by the global pandemic.

The J.M. Smucker Company shared its fiscal 2021 outlook, noting the pandemic is expected to cause continued, “significant uncertainty.”

Net sales are expected to be down 1% to 2% for fiscal 2021, adjusted earnings per share are projected between $7.90 and $8.30, free cash flow is estimated between $900 million and $950 million, capital expenditures are expected to total $300 million, and the company’s effective tax rate is anticipated to be 24%.

“The unprecedented environment caused by COVID-19 has drastically shifted assumptions across the industry, including the preliminary direction we provided for fiscal year 2021,” Smucker said. “The increased contribution from the initial stock-up purchasing in the fourth quarter, a significant headwind throughout 2021 for the away from home business and incremental costs related to COVID-19 will be only partially offset by at-home consumption growth for our coffee and consumer foods businesses. This will result in year-over-year declines for both sales and adjusted earnings per share.”

The company said it expects its Away From Home business to continue its decline amid COVID-19, supplemented by continued gains in its Retail Coffee and Retail Consumer Foods segments in the United States.

"Looking ahead, we anticipate increased at-home consumption to continue during the beginning of our fiscal year 2021 – though at a more moderate rate as stock-up purchasing in the fourth quarter is not anticipated to reoccur, and significant declines for the Away From Home business are expected to persist throughout the year,” Smucker said. “We remain focused on meeting the demand needs created by the current environment, while continuing to execute against our strategic priorities to position the business for long-term growth."

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