Hungry Jack got jacked this morning, as shares of parent company International Multifoods (NYSE:IMC) fell more than 20% on news that it significantly reduced its earnings outlook for the next several years due to slowing sales, increased competition, and trouble in key product categories.

Besides Hungry Jack's pancakes and syrups, International Multifoods (IMC) is known for such product lines as Martha White muffin and brownie mixes, Pet evaporated milk, Robin Hood flours, Farmhouse pasta and rice dishes, and Gladiola cornbread mix. It also sells products under the Pillsbury name through a licensing agreement with the General Mills (NYSE:GIS) subsidiary.

Retail customers of IMC's consumer products division include Wal-Mart (NYSE:WMT) and Kroger (NYSE:KR), while SYSCO (NYSE:SYY), Costco (NASDAQ:COST), and others buy for wholesale and retail purposes through IMC's foodservice products operation.

IMC has worked to simplify its operations, notably withdrawing from the foodservice distribution business in September 2002 and dropping its foodservice pie line earlier this year. (The latter move, while relatively small financially, also included a plant closure.) But as helpful as these moves might have been, strong results experienced earlier this year haven't held up as competitors fired back. Now IMC is looking for revenue growth of no more than 3% annually through fiscal 2007.

Operating income and net income are expected to increase at higher rates as the company controls costs to maintain earnings while not sacrificing investment in its brands, without which revenue might come under even further fire. (We discussed a similar strategy from Kellogg (NYSE:K) earlier this week.) This is a welcome approach, as "growing by cutting," especially in consumer businesses, is hardly a long-term solution.

Today feels like a starting-over point for IMC investors. The company is still projecting strong free cash flows in the coming years, a sign of a well-run business. IMC is in no danger of suddenly disappearing from the planet. But given the retrenching stance IMC took today, it will take some time before we'll be able to judge the effectiveness of the company's new approach.

Dave Marino-Nachison doesn't own any of the companies in this story. He can be reached at