SJM · The J. M. Smucker Company

Period Performance

Period Performance

For the three months ended July 31, 2025, net sales decreased 1% year-over-year to $2,113.3 million. The decline includes $52.8 million of noncomparable net sales in the prior year from divested businesses. Excluding divestitures and foreign currency, net sales grew 2%, driven by 6% net price realization partially offset by 4% volume/mix decline. GAAP gross profit fell 40% to $474.7 million (22.5% of sales) from $797.2 million (37.5%), primarily due to higher commodity costs (including unfavorable derivative impacts), unfavorable volume/mix, and divestitures. Operating income decreased 87% to $45.6 million (2.2% of sales) from $349.5 million (16.4%). On an adjusted basis, gross profit declined 11% to $743.2 million (35.2% of sales) and operating income fell 17% to $370.3 million (17.5%). Net income swung to a loss of $43.9 million ($0.41 per diluted share) from income of $185.0 million ($1.74) in the prior year, impacted by $309.9 million in divestiture losses and higher special project costs. Adjusted earnings per share decreased 22% to $1.90 from $2.44.

Segment Dynamics

• U.S. Retail Coffee: Sales up 15% to $717.2 million, with net price realization of +18% across the portfolio, offset by volume/mix decline of 2% (Dunkin', Folgers down; Café Bustelo up). Segment profit down 22% to $134.2 million due to higher commodity costs, unfavorable mix, and higher marketing spend.
• U.S. Retail Frozen Handheld and Spreads: Sales down 2% to $484.7 million, reflecting volume/mix decline of 2% (peanut butter and fruit spreads down, Uncrustables up) and net price decline of 1% (higher trade spend on peanut butter). Segment profit down 4% to $114.3 million, impacted by higher marketing spend and unfavorable mix, partially offset by lower pre-production expenses.
• U.S. Retail Pet Foods: Sales down 8% to $368.0 million, with volume/mix down 8% (dog snacks and lower contract manufacturing). Net price neutral. Segment profit down 12% to $101.3 million on unfavorable volume/mix and higher costs, partially offset by lower marketing.
• Sweet Baked Snacks: Sales down 24% to $253.2 million, including $52.8 million noncomparable prior-year sales from divested Voortman and value brands. Excluding divestitures, sales declined 10%. Segment profit down 54% to $34.2 million, reflecting divestiture impact, unfavorable volume/mix, and higher costs.
• International and Away From Home: Sales up 7% to $290.2 million, with net price up 9% (coffee and portion control) and volume/mix down 2% (coffee and fruit spreads down, Uncrustables up). Segment profit up 35% to $65.5 million on higher net price realization and lower SD&A expenses.

Forward View

Management anticipates input cost inflation and a dynamic macroeconomic environment (tariffs, regulatory changes, consumer behavior shifts) to persist through the remainder of fiscal 2026. Price elasticity of demand could remain elevated. The company is focusing on its transformation initiative for sustainable productivity to grow margins. For the full year, an effective tax rate of approximately 24.0% is expected. Capital expenditures were $84.3 million in Q1, primarily for plant maintenance and improvement. Free cash flow was negative $94.9 million, impacted by lower net income and higher working capital. The company expects to meet cash requirements through cash on hand, operations, and credit facilities. No material changes were noted in critical accounting estimates.