J.M. Smucker Stock Falls on Earnings Miss. Why Strong Coffee Sales Couldn’t Help.

The packaged food maker reported mixed fiscal first-quarter earnings. (Getty Images)

Shares of J.M. Smucker were falling Wednesday after the packaged food maker reported mixed quarterly earnings.

The company, which owns brands like Jif peanut butter and Folgers coffee, posted adjusted earnings of $1.90 a share for its fiscal first quarter, a decrease of 22% from a year ago and below analysts’ consensus estimates of $1.93.

J.M. Smucker stock was down 5.1% in Wednesday trading.

First-quarter sales totaled $2.11 billion, down 1% from the prior year and just shy of Wall Street’s call for $2.12 billion. The sales decline reflects the divestiture of certain sweet snacks brands in March. Excluding those impact, sales actually increased 2% year over year.

But a rising sales number doesn’t mean the company is selling more. The increase in comparable net sales reflects a 6 percentage point increase from higher prices in its products, according to Smucker, which added that the move higher was primarily driven by more expensive coffee as unfavorable weather conditions drove up the commodity’s costs.

Net sales for Smucker’s coffee business increased 15%, lifted 18 percentage points by higher pricing. But the segment has shown resilience in demand: Volume declines dragged sales by only 2 percentage points despite the sharp price gains. There actually was increased demand for the Café Bustelo brand. Still, the segment’s profit narrowed because of higher commodity costs and marketing spend.

The company’s three other domestic segments—frozen hand-held and spreads, pet foods, and sweet baked snacks—saw declining net sales from a year ago.

Sales in sweet based snacks, particularly, declined 24% from the previous year. Even excluding divested brands, sales in the category were down 10% because of weak demand for snack cakes. Despite the company cutting prices, consumers were buying less.

With the category struggling in recent quarters, Smucker’s $5.6 billion purchase of Twinkies maker Hostess Brands in late 2023 looks increasingly damaging, as Barron’s reported in June.

Smucker raised its net sales expectations for the fiscal year. Management now expects net sales to increase 3% to 5% from the previous year, up from the previous estimates of growth in the 2% to 4% range. The company continues to expect adjusted earnings per share between $8.5 and $9.5 in fiscal 2026.

Write to Nate Wolf at nate.wolf@barrons.com