J&J Snack earnings down on softer shopper local weather

PENNSAUKEN, NJ. — Ongoing inflationary pressures and the softening shopper surroundings weighed on first-quarter earnings at J&J Snack Meals. The Pennsauken-based firm additionally felt the impression of a winter storm that affected many of the United States throughout two key promoting weeks in December, particularly in theaters and outside venues.

Internet earnings at J&J Snack Meals within the first quarter ended Dec. 24, 2022, totaled $6.6 million, equal to 35¢ per share on the frequent inventory, down 40% from $11.09 million, or 58¢ per share, in the identical interval a 12 months in the past. Internet gross sales elevated 10% to $351.34 million from $318.49 million.

Talking throughout a Jan. 31 convention name with analysts, Daniel J. Fachner, president and chief government officer of J&J Snack Meals, stated the corporate has “hit the bottom operating” with the Dippin’ Dots enterprise that it acquired last summer for $222 million. He stated J&J Snack Meals already has gained placement for Dippin’ Dots at Regal Theaters, the second largest movie show chain in the USA.

“Actually, we elevated unit gross sales in our Dippin’ Dots enterprise over 14% within the first quarter,” he stated.

However Mr. Fachner additionally acknowledged that regardless of performing above expectations, Dippin’ Dots is a seasonal enterprise and, as such, negatively impacted outcomes by about $1 million within the first quarter.

“This enterprise will drive most of its profitability within the second half of the 12 months,” he stated, including that the corporate continues to work to combine Dippin’ Dots into the J&J programs, processes, buyer channels and operations.

Foodservice working earnings at J&J Snack Meals fell 30% within the first quarter to $6.4 million from $9 million. Gross sales elevated 12.5% to $238.3 million from $211.73 million. Inside the foodservice division, gross sales of bakery merchandise have been $108.9 million, up 1% from the identical quarter a 12 months in the past, whereas gross sales of churros climbed 32% to $25.76 million from $19.49 million. Gross sales of sentimental pretzels elevated 3.5% to $52.22 million. Gross sales of handhelds, in the meantime, elevated 27% to $23.57 million within the quarter.

“Q1 income was up 13%, at the same time as we handle via the difficult winter climate occasions in December,” Mr. Fachner stated. “This, mixed with a weaker slate of film releases, had some impression on our gross sales. Comfortable pretzel gross sales elevated 4% this quarter. We see expanded development alternatives all year long as … Pretzel Bites centered on the leisure, theater, QSR and comfort channels. We additionally noticed continued sturdy momentum in our churros enterprise with gross sales rising 32% as we introduced our new Hola! Churros brand to foodservice. The gross sales group expanded placement of churros with main distributors, massive regional QSRs and quick informal eating places. We’re assured that there are nonetheless vital development alternatives throughout QSR, quick informal, comfort channels and with main distributors, together with a major alternative with a significant QSR burger chain going into take a look at within the first half of 2023. Hola! Churros may have an entire promoting and advertising and marketing help plan all year long.”

Transitioning to its foodservice bakery enterprise, Mr. Fachner stated gross sales elevated 1% pushed by sturdy development of handhelds and cookies with a significant membership buyer. J&J Snack Meals additionally expanded enterprise with a strategic comfort retailer buyer.

“Trying ahead, we see extra development alternatives for our Icee cookies and our frozen cookie dough,” he stated. “Our technique to enhance margins within the bakery enterprise is working as we shift the combination to extra worthwhile merchandise and prospects and rationalize much less productive gadgets in our portfolio. (We’re) more than happy with our bakery group. Lastly, we proceed to forecast added positive aspects in key gadgets akin to handhelds and funnel fries.”

Within the retail grocery store section within the first quarter, working earnings was $1.11 million, down 78% from $4.98 million within the earlier 12 months’s first quarter. Gross sales elevated narrowly to $43.07 million from $42.7 million. Inside the retail grocery store section, gross sales of sentimental pretzels slid 11% to $14.49 million. Gross sales of frozen novelties elevated narrowly to $17.97 million from $17.8 million, whereas gross sales of biscuits eased 4% to $7.91 million from $8.27 million. Gross sales of handheld gadgets rose 127% to $2.89 million from $1.28 million.

“Gross sales elevated 1% for the quarter because the trade began to expertise softness and macroeconomic spending for consumables,” Mr. Fachner stated. “In our Comfortable Pretzel section, we noticed continued power in our flagship SuperPretzel model, pushed by distribution positive aspects and natural development. Nonetheless, total pretzel gross sales declined 11% within the quarter, primarily in licensed and personal model merchandise as we executed the deliberate SKU rationalization of lower-margin gadgets. Because the 12 months progresses, our sturdy concentrate on SuperPretzel manufacturers, together with new SuperPretzel Pretzel Chunk flavors, launch of SuperPretzel knots and tremendous SuperPretzel Bavarian pretzel sticks, is predicted to steer a full 12 months income development within the comfortable pretzel class.”

Within the frozen drinks section, J&J Snack posted working earnings of $1.83 million, up 113% from $860,000 in the identical interval a 12 months in the past. Gross sales elevated 9% to $69.97 million.

Mr. Fachner stated J&J Snack Meals has dedicated to speculate near $100 million so as to add seven new manufacturing traces that can add capability and drive effectivity to higher automation.

“To this point, we now have opened two new frozen novelty traces and one extra churro line,” he stated. “Over the subsequent six months, we are going to activate three extra traces centered on expanded pretzel manufacturing.”

Requested how a lot capability the traces would possibly unlock, Mr. Fachner defined: “I haven’t got the precise quantity to present you on the capability, however it does permit us to develop our core merchandise, proper? So one of many issues we actually skilled was outgrowing our core, which is our churros and pretzels and frozen novelties and even our pretzel bar aspect of the enterprise. And so we now have addressed that to have the ability to have sufficient capability to get our gross sales group again on the market and actually promoting new traces and new alternatives. It does assistance on the margin aspect as a result of we have gotten rather more environment friendly in several areas, even making merchandise like in our novelty aspect, making merchandise the place they’re bought versus possibly making them in a single a part of the nation and ship them throughout to a different aspect. So there are margin enhancements that we expect that we will understand as we open these up.”