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Why J.M. Smucker Stock Dropped Today

By Steve Symington – Updated Aug 27, 2019 at 11:48AM

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The jelly, coffee, and pet food leader delivered a stale quarter and lowered its full-year guidance.

What happened

Shares of J.M. Smucker (SJM 1.20%) were down 9.4% as of 10:30 a.m. EDT Tuesday after the consumer products company announced weaker-than-expected fiscal first-quarter 2020 results.

Quarterly net sales fell 6% year over year to $1.78 billion, including a 4% decline in comparable net sales. On the bottom line, that translated to an 11% drop in adjusted net income, to $1.58 per share. Analysts on average were expecting earnings of $1.74 per share on revenue of $1.87 billion. 

Smuckers sign with barn-style store in the background.

Image source: J.M. Smucker

So what

CEO Mark Smucker said the company's performance suffered because of a combination of "deflationary pricing" and shipment timing for coffee and peanut butter products, as well as competition in the premium dog food market.

"We have continued momentum in many key product categories," he added, "and we are already taking decisive actions and prioritizing initiatives that strengthen our business."

Now what

Even so, the company also lowered its full fiscal-year outlook to call for net sales to be flat to down 1% from last year (compared with its previous target for growth of 1% to 2%), and for adjusted EPS of $8.35 to $8.55 (down $0.10 per share from both ends of its prior range).

Until Smucker's strategic initiatives begin to bear tangible fruit by returning the company to sustained, profitable growth, I suspect its stock will remain under pressure.

Steve Symington has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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J.M. Smucker Stock Quote
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$151.26 (1.20%) $1.79

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