The effects of a pistachio nut recall helped drag down the third quarter performance of John B. Sanfilippo & Son, despite a 6.6% rise in net sales.
The nut company said that net sales increased by 6.6% to US$113.8m for the third quarter of fiscal 2009 from $106.7m for the third quarter of fiscal 2008.
However, it reported a net loss for the quarter of $2.5m, or $0.23 per share diluted, compared to a net loss of around $8.8m, or $0.82 per share diluted, for the third quarter of fiscal 2008.
The net income through the first three quarters of fiscal 2009 was $3m compared to a net loss of $8.6m for the first three quarters of fiscal 2008.
In March and April, the company had to recall a series of products that contained roasted inshell pistachios due to a recall by its supplier. As a result, the company recorded a charge totalling $3.5m for the third quarter and corresponding year to date period of fiscal 2009.
Sales volume for the current quarter, measured as pounds shipped to customers, increased by 9.2% over pounds shipped in the third quarter of fiscal 2008. The increase in unit volume in the quarterly comparison was driven primarily by a considerable increase in sales volume in the consumer channel from expanding private label sales with new and existing customers.
Net sales increased in the consumer, contract packaging and export distribution channels and decreased in the foodservice and industrial distribution channels, the company said.
For the first three quarters of fiscal 2009, net sales increased by 2.4% to $426.4m from $416.5m for the first three quarters of fiscal 2008. Total unit volume sold fell by 5.3% in the year to date comparison.
The decrease in unit volume sold in the year to date comparison is due primarily to declines in pounds shipped in the industrial and export distribution channels from lower sales of peanuts and walnuts, respectively.
“Before considering the impact of the pistachio recall, our loss before income taxes would have been $0.4m. We consider this loss to be more in line with what we would characterise as normal operating results for a third quarter,” said Jeffrey Sanfilippo, CEO.
“The improvement in operating results, excluding the impact of the pistachio recall, was due in large part to increased sales volume, improved manufacturing efficiencies, improved inventory management and effective control of selling and administrative spending as sales volume increased,” Sanfilippo said.
“These areas of improvement represent just some of the positive results that we have garnered from the improvement initiatives that we implemented at the beginning of fiscal 2009. Our business is growing, especially in the consumer and contract packaging channels. This growth did not come by accident, but rather, it came from a commitment to invest in capacity and capabilities that differentiate us from the rest of the industry. We will continue to leverage this competitive advantage to help further grow our business.”