INSIGHT: Lance hit by c-store weakness
US snack group Lance has admitted it was "disappointed" with its third-quarter performance, when sales were hit by a slowdown in the convenience channel and the implementation of IT systems.
Despite a 29% jump in third-quarter earnings, which rose to US$8.8m, Lance president and CEO David Singer told analysts that he was "a little disappointed" with the result.
Singer said that the economic downturn and declining customer numbers in the convenience channel dented c-store sales, which were down 15%.
However, he added that some of this decline was "self-inflicted" due to pricing actions taken in the nut business during the period.
"We put prices up and this was not followed by the competition. We are now fixing this and expect Q4 to see an increase," he said.
Singer also highlighted the upheaval caused by the introduction of Enterprise Resource Planning (ERP), which saw personnel and routes changed and disrupted the relationships Lance's sales team had built with customers.
Sounding a more positive note, Singer added that after a ten-week period sales levels typically returned to normal. As the company has now moved the majority of its business over to the new system, disruption going forward is expected to be minimal, Singer added.
Looking ahead, Singer insisted that fourth-quarter margins are expected to "rebound significantly" and fiscal 2010 sales and earnings are expected to grow by "at least" 6% and 30% respectively.
Lance, Singer said, was ramping up its advertising spending in a bit to grow branded sales. The company is also increasing investment in product development and acquisitions, he added.
"We are really positioning our business to support growth in the long-term. We feel good about the future as it relates to profitability."
US snack group Lance has relaunched the Ice Lemon variant of the Archway Cookies range it purchased in 2008....
US snack group Lance has posted a jump in full-year earnings, driven by improved margins and sales gains....
Results season started in earnest this week, with Unilever, Kellogg and Hershey among the food giants announcing annual results....
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