Smucker falls most in nearly 40 years with tariff hit to profit
JM Smucker Co. declined the most in nearly four decades after saying U.S. tariffs increasing costs in its coffee business will hurt profit, continuing a challenging run for the biggest U.S. packaged food producers.
The company, which owns the Folgers and Cafe Bustelo coffee brands, said adjusted earnings this fiscal year will be as much as $9.50 a share. The impact of higher coffee costs and U.S. levies reduced that forecast by roughly $1 a share, Smucker said.
Shares sank as much as 14% on Tuesday in New York, the biggest intraday drop in data compiled by Bloomberg that extends back to 1988. The stock had risen about 1.6% this year through Monday’s close, less than the S&P 500 Index’s gain of roughly 2%.
“Ahead of the print, we heard some concerns about” the outlook, Citi analyst Thomas Palmer wrote in a note to clients. “This is well-below even the more bearish outlooks we heard.”
The company generated about a third of its revenue from coffee last fiscal year. It raised prices for the beverage in May. And it expects to boost them again in August. Overall, prices will be up about 20% this year, Smucker said.
Smucker increased its coffee prices three times since last June. The company expects to boost them again in August. These hikes are expected to hurt demand this year, Smucker said.
Hostess woes
The company’s sales have been weighed down by its November 2023 acquisition of Hostess. The maker of sweet treats such as Twinkies has underperformed as some consumers pull back on spending.
Revenue from the division housing Hostess sank 14% last quarter, excluding brands Smucker has sold off. The company said operating income took a hit from impairment charges relating to Hostess totaling about $980 million.
On the positive side, Smucker’s results have been bolstered by the continued growth of its popular Uncrustables frozen sandwiches. It increased prices on the product this month, the first hike in more than three years.
The firm expects the brand to eclipse $1 billion in sales by the end of the fiscal year that runs through April 2026. That’s up from about $920 million the previous year.