Coffee Service

COVID-19 boosts Smucker's fiscal Q4, warns on future sales

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June 4, 2020

The J.M. Smucker Co., maker of Folgers coffee, Jif peanut butter and Milk-Bone dog treats, reported higher earnings in the fiscal fourth quarter ended April 30, as consumers stocked up on staples during the COVID-19 pandemic, but warned of a slowdown in fiscal 2021 earnings.

The Orrville, Ohio-based company reported that adjusted earnings rose 24% to $2.57 a share, compared with year-ago figures of $2.08 a share. Adjusted earnings beat consensus estimates.

Net income was $1.98 a share for the quarter, compared with 63 cents a year ago.

"Our strong response is reflected in our exceptional fourth-quarter results, with record setting net sales and adjusted earnings per share," Mark Smucker, president and CEO of the company, said in the earnings report. "This exceptional growth is 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."

Smucker reported a 10% sales increase to $189.9 million, compared with the year-ago quarter.

However the company projected a sales decline of 1% to 2% for fiscal 2021 compared to 2020, with adjusted earnings per share ranging from $7.90 to $8.30, and free cash flow to range from $900 to $950 million.

The decline reflects lapping the $185 million of incremental net sales in the fourth quarter of fiscal year 2020 and an estimated $120 million COVID-related reduction to fiscal year 2021 net sales primarily resulting from a significant and extended decline in the company's away from home business, partially offset by increased at-home consumption.

Earnings guidance reflects the decrease in net sales and estimates for adjusted gross profit margin of approximately 37.5%.

The outbreak of COVID-19 had a material benefit to fiscal year 2020 results and has caused significant uncertainty for fiscal year 2021 projections. 

"Looking ahead, we anticipate increased at-home consumption to continue during the beginning of our fiscal year 2021 — though at a more moderate rate as stock-up purchasing in the fourth quarter is not anticipated to reoccur, and significant declines for the away from home business are expected to persist throughout the year,” Smucker said in the report. 

For an update on the coronavirus pandemic's impact on convenience services, click here.