US organic food group Annie’s has lowered its forecast for annual profits, despite booking an increase in sales and earnings for the first nine months of its fiscal year.
Net income in the nine months to 31 December rose to US$10.4m, up 41%, the group revealed yesterday (10 January). Operating income increased 43% to $17.6m.
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Gains were driven by an improved gross margin trend, which strengthened quarter-on-quarter, the company said. Higher brand investment led to a jump in consumption, Annie’s added. Sales in the nine months rose from $117,3m to $143.9m.
However, the company lowered its full-year earnings outlook. The group forecast adjusted EBITDA of $29-30m, down from previous guidance of $31m, and cut EPS estimates to a range of $0.91-93, down from the “lower end” of $0.97-1.01.
Shares in Annie’s fell yesterday from an open of $42.15 to close at $41.83.
Nevertheless, CEO John Foraker was upbeat on Annie’s prospects. “Our authentic and trusted brand, the additions we are making to our team and our deep innovation pipeline position us well for fiscal 2015 and beyond,” he insisted.
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By GlobalDataJanney Montgomery Scott analyst Jonathan Feeney concurred that the group’s long-term prospects remain strong, despite short-term drag factors.
“Earnings missed and full-year guidance was lowered due to organic wheat inflation, expense growth, and delayed productivity. While we still have our concerns about non-core category and channel expansion, new competitive entrants in mac ‘n cheese, and deferred brand and capital investments, the potential growth opportunity remains compelling.”
