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.
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