Smucker quarterly sales miss overshadows upbeat outlook

(Reuters) - J.M. Smucker Co missed Wall Street estimates for quarterly sales on Thursday, taking a hit from lower prices for its coffee and peanut butter products, overshadowing the packaged food maker’s upbeat profit forecast for the year.

Like several of its peers, Smucker too has cut prices of some of its consumer food products such as peanut butter and fruit spreads to deal with increasing competition from private-label brands. It has also lowered its coffee prices to pass on the benefit of lower raw material costs to consumers.

This led to an increase in the volumes sold for the company, but weighed on revenue and margins. In the fourth quarter, gross margin fell to 36.4% from 38.8%.

“The quality of the quarter was not great with both sales and the gross margin missing the Street,” said J.P Morgan analyst Ken Goldman.

Shares of the company fell as much as 5.8% to $117.95 in morning trade.

Sales in Smucker’s U.S retail consumer segment fell 15%, hurt by the divestiture of its domestic baking business last year as well as lower pricing for Jif peanut butter, Crisco Oils and Smucker fruit spreads.

Sales for Folgers brand of coffee, including the premium coffee line 1850, slipped 3%.

However, net sales rose 6.8% to $1.90 billion, but missed the average analyst estimate of $1.93 billion, according to IBES data from Refinitiv.

A bright spot for Smucker was its pet food segment, which posted double-digit growth at the back of strong demand for its Nature’s Recipe brand and Meow Mix.

Excluding items, the company earned $2.08 per share in the fourth quarter, handily beating estimates of $1.95, while it also forecast full-year profit and sales above estimates, betting on its upcoming products to boost sales.

The Orrvile, Ohio-based company has been spending on product launches as well as marketing and promotions for core businesses, while expanding its digital capabilities to boost revenue.

Smucker forecast adjusted earnings of $8.45 to $8.65 per share for the year and sales to grow 1% to 2%.

Reporting by Soundarya J in Bengaluru; Editing by Shinjini Ganguli