JM Smucker has cut the long-term sales growth the company expects to see from its under-pressure sweet-snacks business.
The Hostess owner, battling falling sales from that part of its business, said its long-term forecast for growth from the division now stands at 2%.
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JM Smucker paid around $5.6bn to buy Twinkies maker Hostess Brands in 2023, a deal CEO Mark Smucker then described as “a compelling expansion of our family of brands”.
However, among analysts there was some disquiet about such a significant foray into less-healthy snacks amid growing signs of increased interest in better-for-you options.
In JM Smucker’s fiscal year to 30 April 2025, sales and earnings from the company’s Sweet Baked Snacks division tumbled.
The unit remains a problem for the group. This week, JM Smucker reported its results for fiscal third quarter to the end of January and sales and profits from Sweet Baked Snacks again fell.
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By GlobalDataOverall, the group’s third-quarter numbers included higher sales but a loss amid impairment charges on its sweet-snacks business. JM Smucker also booked impairment charges on the unit twice in 2025.
“In Sweet Baked Snacks, the path to stabilisation is taking longer than we expected,” Mr Smucker acknowledged yesterday.
The JM Smucker CEO said the division’s third-quarter results were “below expectations”. He pointed to higher costs, plus “executional and operational challenges”.
Mr Smucker said the group is taking to action to “strengthen the business for the long term”, including cutting products by 25% to focus on better-selling and more profitable SKUs. The company has also cut its promotional work from January to the end of its financial year in April.
He added: “Progress on our Sweet Baked Snacks stabilisation strategy will continue to take time. With this in mind, we will take a prudent approach to investments in the business while ensuring we remain focused on our most compelling growth opportunities for the total company.”
Tucker Marshall, the EVP for the division, said JM Smucker had booked a $508m impairment charge related to the goodwill of the unit and a $454m impairment charge related to the Hostess brand trademark during the quarter.
He added: “These impairment charges are reflective of both near-term underperformance and revised long-term expectations for both net sales and segment profit. Our updated assumptions, in conjunction with the underperformance of the sweet baked goods category, led to a reduction of the projected long-term growth rate to 2% for the reporting unit, as well as the decision to begin amortising the Hostess brand trademark in the fourth quarter.”
Speaking to analysts, the company’s management were asked about the prospects for the division in the group’s 2026/27 financial year but said it was too early to provide detailed thoughts.
“It’s early for us to lean into what the outlook is for FY 2027,” Marshall said.
“Profitability is below our expectations and particularly in our third quarter. We should see an improvement into our fourth quarter from a profit standpoint. As we get to our fourth-quarter earnings call, we’ll be able to kind of lay out how we see the profit trajectory of the business. Right now, the team still continues to advance its stabilisation journey around improving profits and that’s really going to come through how we continue to navigate our bakery environment and manage overall costs.”
Alongside the publication of the third-quarter results, JM Smucker announced it had appointed two new directors to the board of the US food-and-beverage group after a deal with activist investor Elliott Investment Management.
David Singer, a former CEO of snacks group Snyder’s-Lance, and NRG Energy CFO Woo-Sung Chung (who is also known as Bruce), will join the JM Smucker board.
JM Smucker said the appointment of the new directors follow “constructive engagement” with Elliott.
The company has also entered into an “information-sharing agreement” with the investor “to facilitate collaboration toward the shared goal of driving sustainable value for all shareholders”.
Asked on the analyst call where JM Smucker was seeing “the most common ground” with Elliott so far, Mr Smucker gave a general response.
“The engagement with Elliott is recent and has actually been very constructive. We’ve had a number of meetings with the folks there, and largely what they see is what many of you already know, we’re a great company with strong brands. There’s really good alignment between what they’re seeing and what we are seeing, focusing on continuing operating improvements, which will lead to profit restoration over time, continued portfolio management, in the near term, focusing on organic growth, also disciplined capital allocation, and then lastly, governance,” he said.
