Release Date: February 27, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• JM Smucker Co (NYSE:SJM) anticipates sequential improvement in sales, driven by recovery in the pet portfolio and a better-than-expected outlook in the coffee segment.
• The company remains confident in the Hostess acquisition, citing the brand's iconic status and underlying trends in sweet snacking.
• Despite high coffee costs, the at-home coffee segment remains strong, with consumers favoring it as an affordable option.
• The company is on track to achieve $100 million in synergies from the Hostess acquisition by the end of fiscal year 2026.
• Leadership changes and strategic actions are being implemented to stabilize and grow the Hostess brand, with a focus on innovation and limited-time offerings.

Negative Points

• Comparable sales in fiscal Q3 declined by more than 1%, and the company revised its fiscal 2025 sales target downward.
• JM Smucker Co (NYSE:SJM) took an $800 million goodwill write-down and a $200 million impairment charge related to the Hostess acquisition.
• The company faces significant headwinds from green coffee inflation, impacting fiscal 2026 earnings outlook.
• Sweet Baked Snacks category is experiencing challenges due to a more selective consumer and executional missteps in distribution and merchandising.
• The company reported a $30 million supply chain disruption in the pet food segment, impacting Q3 results.

Q & A Highlights

• Warning! GuruFocus has detected 3 Warning Signs with SJM.

Q: Comparable sales in fiscal 3Q declined, and a rise is needed in fiscal 4Q to meet the revised '25 sales target. Where do you see improvement to support this? A: Tucker Marshall, CFO: We expect sequential improvement driven by our pet portfolio and a better-than-expected outlook within our coffee portfolio.

Q: You took an $800 million write-down on goodwill and a $200 million impairment charge for Hostess. How comfortable are you with your M&A process? A: Mark Smucker, CEO: We remain confident in the Hostess acquisition. The brand is iconic, and we are taking specific actions to stabilize it. We acknowledge executional missteps but are confident in our leadership and strategy to drive growth.

Q: Can you provide more details on the fiscal '25 comparable sales guidance revision? A: Tucker Marshall, CFO: The guidance revision reflects a $60 million change, primarily due to a $20 million miss in the third quarter and a $20 million call down in Hostess for the fourth quarter.

Q: Regarding fiscal '26, do you expect earnings growth despite green coffee inflation? A: Tucker Marshall, CFO: It's too early to call. We see a path to above algorithm growth for adjusted earnings per share, but green coffee inflation will be a significant headwind.

Q: How are you addressing the declines in Jif and fruit spreads? A: Mark Smucker, CEO: Jif had a strong first half, and we expect it to continue performing well. For fruit spreads, we are increasing marketing and advertising to stabilize the category.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.