Packaged foods have become increasingly important in our daily lives since it helps save time in food preparation. Therefore, companies such as J&J Snack Foods (JJSF, Financial) and ConAgra (CAG, Financial) have gained importance. Both these companies provide a variety of snack foods, which attracts busy customers to its products.
J&J Snack Foods has been able to improve through its strategic moves. Its third quarter numbers were pretty impressive, enabling its share prices to rise.
Results speak for themselves
Driven by higher demand for soft pretzels as well as its frozen beverages, revenue stood at $257 million, 8% higher than last year. Demand for soft pretzels increased mainly due to the addition of new products such as rolls, sticks, soft pretzel buns as well as twists. These products attracted more and more customers. Also, the spring season resulted in demand for frozen beverages.
Revenue from the Food service segment was one of the bright spots. Sales to food service customers jumped 9%. Even if we exclude the effect of the contribution from New York Pretzels, this segment grew a decent 8% over last year. Further, pretzel sales to the food service market surged 14% to $41.3 million as demand in schools, restaurants and club stores, increased. In fact, excluding the contribution from New York Pretzel, sales actually rose 11% during the quarter.
Even other segments such as frozen juices performed well. Revenue from ices and frozen juices climbed 11% to $18.2 million as demand in warehouse club stores increased.
Revenue from bakery products increased 6%. Even Churros sales jumped 6% over the prior year. The Churros segment is strengthened by the by the acquisition of California Churros, back in 2010. This has been a game changer since it expanded this category largely.
Earnings for the quarter also rose 13% to $1.26 per share, over the previous year’s quarter. This shows that the company is able to manage its costs efficiently, resulting in bottom line gains.
A note on peers
J&J Snack Foods’ peer ConAgra has also been expanding its product portfolio. However, it uses both the acquisition strategy as well as new product developments to enhance its list of offerings. For instance, along with a number of new products introduced to suit customers’ needs, ConAgra acquired Ralcorp Holdings. The acquisition is expected to yield a number of benefits, including higher top and bottom line.
Spreading the net
J&J Snack Foods’ initiatives are indeed endless. It has recently entered into partnerships with Mondelez (MDLZ) and Dunkin Brands (DNKN). For Mondelez, J&J Snack Foods will be making Oreo churro, as per the terms of the agreement. For Dunkin Brands, the packaged food provider will make the new pretzel Twist. Pretzel Twist is a newly introduced soft pretzel twisted and sprinkled with salt.
Also, the company acquired Philly’s Famous Water Ice in May. This acquisition is in addition to a number of buyouts, including Kim & Scott’s Gourmet Pretzels, which provides pretzels made of natural ingredients. Hence, J&J has been able to expand its customer base to the health conscious crowd also.
Takeaway
J&J Snack Foods is playing it smart. Its new product introductions are coupled with addition of businesses. These new businesses are not only providing an expanded market, but also add to its offerings and revenue. Moreover, its partnership agreements with the two companies also look interesting. Therefore, this retailer has made it shine out among other industry players.
