J. M. Smucker’s Pet Food Division Performs Well Amid COVID-19 Pandemic

J. M. Smucker recently reported positive fourth quarter results for its pet food division, driven, in part, by the COVID-19 pandemic, according to Mark Smucker, president and CEO of J. M. Smucker Co. Company-wide net sales echoed similar results.

"I am extremely proud and thankful for how our employees have responded during the COVID-19 pandemic," Smucker said in a statement. "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. 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."

During the June 4 company earnings call, Smucker added, "For pet food, consumer takeaway reversed in April as pet parents began depleting the initial March stock-up purchases. Consumption for pets generally did not increase with the exception of some additional treating as pet parents spent more time at home."

J. M. Smucker’s pet food division reported net sales of $767.8 million, for its fourth quarter ended April 30, compared to $721.2 million in the year-ago period, representing an increase of 6 percent with estimated sales related to COVID-19 contributing 8 percentage points to growth, Tucker Marshall, chief financial officer of J. M. Smucker, said in the call.

Particularly, volume/mix growth for all major brands in the cat food and dog snacks categories was led by the Meow Mix and Milk-Bone brands.

"Cat food continued its strong trends with Meow Mix and 9Lives both growing approximately 20 percent," Marshall said. "Dog treats grew 12 percent, led by Milk-Bone and Pup-Peroni."

In dog food, volume/mix gains for Kibbles ‘N Bits, Nature’s Recipe and Gravy Train were more than offset by the anticipated declines for the Natural Balance and Rachael Ray Nutrish brands, according to Smucker.

"The declines for Natural Balance were primarily attributable to the pet specialty channel, which experienced declines in foot traffic as consumers made fewer stops during their shopping trips and shifted purchases to the grocery and e-commerce channels," Smucker said. "For Nutrish dog food, volume mix consumer takeaway and household penetration all grew during the quarter. As anticipated, net sales declined following over 20 percent growth in the prior year fourth quarter primarily related to sell-in from distribution expansion and higher pricing."

E-commerce sales among the pet food segment increased more than 60 percent, according to Smucker.

Sales for the Kibbles ‘n Bits brand increased more than 20 percent, according to Marshall.

"Branded value dog food also grew, while private label offerings were flat, compared to the prior year," Marshall added. "Pet foods segment profit increased 14 percent compared to the prior year, driven by increased volume mix and reduced marketing expense, which was partially offset by increased distribution and selling expenses."

Year-to-date, the pet food division reported net sales of $2.87 billion, compared to $2.88 billion in the year-ago period.

While economic recovery remains uncertain, the company’s 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.

Commenting on possible fiscal 2021 net sales, Marshall said, "In the U.S. retail pet food segment, pantry de-stocking is anticipated in the first quarter, following the initial consumer stock up in March. We anticipate no material ongoing changes to pet food demand from COVID-19 for the remainder of the year. 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."

Overall, company net sales for the fourth quarter increased 10 percent to $2.1 billion, compared to $1.9 billion in the year-ago period. The Orrville, Ohio-based company reported net income of $226 million for the fourth quarter, compared to $71.5 million in the year-ago period.