Peanut butter makers Smucker’s and Jif cut full-year outlook amid stubborn inflation

Jif peanut butter owner JM Smucker on Wednesday cut its full-year sales and profit forecasts, taking a hit as thrifty consumers opt for cheaper alternatives amid high inflation.

While the company has raised prices on some products, including frozen foods, to compensate for rising raw material costs, it expects lower annual sales as consumers postpone spending on more expensive items.

The company saw weaker demand for discretionary goods categories, including pet food and baked goods, as lower-income consumers were a bit more cautious and selective in their spending, Chief Executive Mark Smucker told Reuters.

Consumers struggling with rising living costs are opting for cheaper private labels for everyday items such as spices and frozen foods, hurting sales of several brands.

Lower-income consumers do not shop at convenience stores like 7-Eleven or take advantage of Smucker’s Hostess Twinkies and Donettes promotions.

“The entire channel is down, affecting everything in the store,” Smucker added.

The company’s shares fell almost 5% on Wednesday.

Smucker’s lowered its full-year net sales estimate to a range of 8.5% to 9.5% from an initial expectation of a range of 9.5% to 10.5%.

The company lowered its full-year adjusted earnings forecast to a range of $9.60 to $10.00 per share, from a range of $9.80 to $10.20.

In the previous fiscal year, the company reported adjusted earnings per share of $9.94.

Like other food companies, Smucker’s has struggled to retain cost-conscious customers who have been hit by high grocery store prices.

Its coffee division, in particular, has been a challenge, as Smucker’s has had to raise prices to cope with higher bean costs, Chief Financial Officer Tucker Marshall told Barron’s. The price hike has led to lower sales, Marshall said.

Smucker’s reported quarterly earnings of $2.44 per share on revenue of $2.1 billion. Its earnings beat FactSet analysts’ estimates of $2.17 per share.

The company’s net sales increased 18% year over year, primarily due to the acquisition of Hostess Brands in November last year.

“Snacking continues to be an important meal opportunity throughout the day,” Marshall told Barron’s magazine.

He said: “70% of consumers eat two snacks a day, and we decided we wanted to get into sweet baked goods.”

Smucker’s has refocused to focus on some of these faster-growing categories, including its snack business. It has divested from its Canadian spice business, its mixed nut business and some pet food brands.

The company’s comparable sales increased 1% compared to the same quarter last year, excluding acquisitions, divestitures and foreign exchange effects.

Smucker’s success was built on several key brands, including Uncrustables.

Sales of frozen jelly sandwiches have increased by several percent compared to last year.

The company also saw sales of Milk-Bone, Meow Mix cat food and Cafe Bustelo coffee brand increase.

Marshall said these brands will continue to drive Smucker’s growth in 2025.

He added that the company expects $100 million in cost savings from its profitable acquisition of Hostess last year.

Marshall said Smucker’s is on track to achieve annual net sales of $1 billion by the end of fiscal 2026.