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What: Shares of private-label food manufacturer TreeHouse Foods
So what: "We are not going to make as much money as we thought we would." TreeHouse didn't say that exactly, but that was the gist of the company's press release yesterday. Thanks to rising commodity costs like packaging and freight, combined with a lag in the realization of price increases, the company lowered its second-quarter and full-year earnings outlook to midpoints of $0.43 and $2.95, respectively. Analysts had been expecting $0.71 in the second quarter and $3.07 for the full year.
Now what: TreeHouse CEO Sam Reed summed the situation up pretty well, saying:
The challenges we faced in the first quarter from rising fuel and other inputs have persisted, and as a private label company, a lag in pricing has a direct effect on earnings. While our pricing efforts have been aggressive, the impact will not be realized in time to offset the higher cost environment of our second quarter.
Rising commodity costs have been a common refrain across the industry, not only from private-label producers but also major branded-goods companies like Procter & Gamble
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