What happened
Shares of food-product manufacturer and marketer Lancaster Colony (LANC -0.51%) fell on Wednesday after financial results for its fiscal fourth quarter of 2023 failed to meet expectations. As of 1 p.m. ET, Lancaster Colony stock was down 11% and hitting year-to-date lows.
So what
Lancaster Colony produces its own food products as well as manufactures products for restaurant chains, including Chick-fil-A, Buffalo Wild Wings, and Darden's Olive Garden. For fiscal 2023, the company had net sales of $1.8 billion, up a nice 8.7% year over year. However, net sales for fiscal Q4 were up only 0.5%, which was below analysts' expectations.
Lancaster Colony's Q4 net income of $9.2 million also came up short of expectations. Moreover, it represented a steep year-over-year drop of 68%.
Now what
Fortunately for shareholders, Lancaster Colony believes its profitability shortcomings won't last. In the past year, the company has invested in updating certain parts of its business, and those expenses will come down in fiscal 2024. Therefore, its profits should bounce back to more normal levels.
Lancaster Colony also has a chance to keep growing revenue through its licensing agreements with restaurant companies. In the coming year, the company will launch steak sauces under the Texas Roadhouse brand name.
It's important for Lancaster Colony to find ways to keep growing revenue and profits. The company has paid and increased its dividend for 60 straight years, landing it on the elite list of Dividend Kings. Growing its profits will allow it to stay on that list by increasing its dividend more in the future.
