ORRVLLE, OHIO — US Retail Pet Foods is holding on to its spot as the most profitable business segment for The J.M. Smucker Company. Sales of pet treats and cat food are maintaining momentum, while dry dog food continues to underperform.
Sales for the company’s US Retail Pet Foods segment were $702 million, representing a $7.1 million or 1% decline from year-ago sales. Excluding its divestiture of Natural Balance, net sales were up 7% over this period.
The company attributed sales gains to higher net price realization, volume/mix and private label sales, which were partially offset by sales declines for Pup-Peroni and Kibbles ‘n Bits brands.
“Growth was mostly driven by our cat food and market-leading dog snacks businesses, with net sales increasing 9% and 7%, respectively, while dog food grew 1%,” stated Mark Smucker, president and chief executive officer of The J.M. Smucker Company.
“Our pet strategy… is really contingent on three legs of the stool,” he said. “The first priority is pet snacks, because we are the leader in pet snacks and continuing to direct resources to our pet snacks business. Our cat food business, where we are the solid No. 2, and Meow Mix, has experienced significant growth. [The brand] continues to see quarter-over-quarter growth even sequentially.”
Dry cat food is leading the company’s cat category, with a 1.2-point market share gain for Meow Mix over the second quarter. Smucker said sales for its Meow Mix brand alone were nearly double the sales rate for the entire dry cat food category over the quarter.
In dog treats, Milk-Bone led the pack with 17% sales growth over the quarter, also outpacing the overall dog treat category in terms of retail sales, Smucker shared.
“…The third leg is our dog food, where we are not as much in a leadership position and recognize that and acknowledge last quarter that we are not going to experience the same level of growth on our dog food business as we would on the other,” Smucker added.
According to Smucker, Rachael Ray Nutrish dry dog food sales grew 4% over the quarter.
Segment profit for the company’s pet segment was $99.6 million in the second quarter, down 20% from year-ago segment profit due to supply chain issues.
“Higher commodity, manufacturing, and transportation costs, partially offset by initial higher net pricing actions, led Pet Foods’ segment profit to decline 20%,” said Tucker Marshall, chief financial officer.
Overall, the company reported a $16 million or 1% net sales increase to $2.05 billion over the quarter. Excluding divestitures and foreign currency exchange impacts, net sales were up 8%.
Strong quarterly results led management to raise Smucker’s full-year guidance. Adjusted earnings per share are now expected to be in a range of $8.35 to $8.75 compared with earlier guidance of $8.25 to $8.65 per share.
Net sales are expected to range from down 0.5% to up 0.5% compared to the prior year. Earlier guidance had sales down 2.5% to down 1.5% for the year. On a comparable basis, the company said net sales are expected to increase approximately 4.5%.
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