J.M. Smucker’s pet food business grows despite profit pressure

The J.M. Smucker US retail pet food segment hit $371.7 million (€319.7M) in net sales for the first quarter of fiscal year (FY) 2027, which ended 31 July 2026. This is up 1% year over year (YoY).

Segment profit declined 2% to $98.9 million (€85.1M), primarily due to higher costs and increased marketing spending. These factors were partially offset by tariff refunds and favorable volume/mix. 

Growth drivers

The net sales increase was supported by a 1-percentage-point contribution from volume/mix, primarily driven by higher cat food sales, partially offset by a decline in dog snacks.

The Meow Mix brand delivered 4% net sales growth. According to CEO Mark Smucker, it is benefiting from durable category tailwinds, including a growing cat population fueled by younger generations of pet parents.

In the dog segment, the Milk-Bone brand returned to volume growth, delivering double-digit net sales growth in soft and chewy snacks.

“We are also beginning to see stabilization in the Pup-Peroni brand, which grew net sales 5% in the quarter, reflecting the actions we are taking to sharpen the brand’s positioning, highlight its differentiated offerings and expand household penetration,” Smucker says.

Company-wide results

Overall, the Ohio-based company’s net sales reached $2.2 billion (€1.9B) in the 3 months to 31 July, up 5% YoY. This was driven by a 4-percentage-point increase from net price realization, primarily due to higher net pricing for coffee.

Net sales also benefited from a 1-percentage-point increase from volume/mix, primarily driven by higher sales of Uncrustables sandwiches and coffee, partially offset by declines in sweet baked goods and peanut butter.

Gross profit jumped by $504.9 million (€434.5M), primarily due to lower costs, including a net favorable impact from derivative gains and losses, as well as tariff refunds, higher net price realization and favorable volume/mix. This included approximately $115 million (€98.9M) in tariff refunds received during the quarter.

Operating income increased by $466 million (€401.0M), primarily reflecting the increase in gross profit, partially offset by higher selling, distribution and administrative (SD&A) expenses.

Guidance

For the full year, J.M. Smucker expects net sales to decrease 1% to 2% YoY, while adjusted earnings per share (EPS) are now expected to range from $10.50 (€9.03) to $11.00 (€9.46).

According to the company, the updated guidance reflects lower net sales, an adjusted gross margin of approximately 38.75%, an 8% YoY increase in SD&A expenses, interest expense of approximately $335 million (€287.9M), an adjusted effective tax rate of 24.2%, and 107.1 million weighted-average common shares outstanding.

For the second quarter, net sales are expected to decrease 3% to 4%. The company expects a low-single-digit decrease in net price realization as lower green coffee costs are passed through to consumers through trade investments. Volume/mix is expected to decline a low-single-digit percentage.

Meanwhile, adjusted EPS is expected to increase in the low-20% range, primarily driven by higher adjusted gross profit in US Retail Coffee and lower interest expense, partially offset by increased SD&A expenses.

FY2027 priorities

During its annual shareholder meeting, the CEO said that for FY2027, the company will focus on three priorities: driving focused organic volume growth across its key platforms, improving profitability and accelerating earnings growth, and maintaining a disciplined approach to capital deployment.

In addition, Rob Ferguson, Chief Product Supply Officer at The J.M. Smucker Company, says that the company is actively managing and monitoring the potential impact of El Niño, particularly on its green coffee commodity, which heavily impacted the decrease in forecast net sales for FY2027.

“The market for green coffee continues to experience volatility. However, the commodity is deflationary relative to the prior year,” he says. “We maintain a flexible structure that allows us to manage cost fluctuations over time, and we have successfully navigated periods of volatility in the past.”

New appointments 

During the meeting, the American manufacturer also announced the election of 11 directors to one-year terms, which will expire at the 2027 Annual Meeting of Shareholders.

They include Woo-Sung (Bruce) Chung and David Singer, who were appointed in February and took office on 15 April.

Chung brings financial expertise and leadership experience to the Board. He currently serves as Executive Vice President (EVP) and Chief Financial Officer (CFO) of NRG Energy, a North American energy and home services company, where he oversees financial strategy, risk management and corporate development.

Meanwhile, Singer has extensive executive, operational and board experience at branded food and beverage companies. He most recently served as CEO of Snyder’s-Lance, a US snack manufacturer. Prior to that, he was EVP and CFO of Coca-Cola Consolidated, the largest independent Coca-Cola bottler in the US.