Yesterday, J.M. Smucker
Already, any enterprising security analyst notes something wrong with that picture. Why would anyone compare August-quarter revenues to last year's for products that hit the books in July? Doesn't that mean that Smucker only had these products for part of last year's August quarter? Yes, indeed.
Even when adjusted for this anomaly, sales of Jif and Crisco leapt by more than 20%. The company's fruit spread divisions showed excellent growth as well. These results show the strength of complimentary brands resting under one roof. Jif had become fairly unimportant to P&G, but can be treated as a central product at smaller, more focused Smucker.
Of course, Big Brother 4 junkies out there know the truth -- increased sales of peanut butter and jelly can be traced to one house in Southern California where some folks are forced to eat PB&J and nothing but.
Smucker had a good-to-great quarter, but one must be careful not to look simply at the top-line growth. Fortunately, there's a lot to like on the balance sheet, too. Smuckers substantially increased its cash holdings, trimmed its inventories and receivables, and extended its payable cycles -- meaning that it is compressing its cash conversion cycle.
This was a fine showing for a fine company, but not the lights-out performance a quick glance might suggest. So far, the acquisition has worked, but it's still in its infancy.
By the way, why on earth isn't Smucker's stock symbol "PBJ?"
Bill Mann owns shares of J.M. Smucker and Procter & Gamble. Help us celebrate or 10th anniversary with 10 Ways to Make More Money Now!