J. M. Smucker (NYSE:SJM) reported stronger fourth-quarter results and outlined expectations for fiscal 2027, with management emphasizing growth in key brands, improving profitability and continued debt reduction.
In prepared remarks, Mark Smucker, Chief Executive Officer, President and Chair of the Board, said the company exceeded the midpoint of its original fiscal 2026 guidance while managing what he described as a “dynamic external environment.” He said comparable net sales rose 5% for the full year, marking the company’s seventh consecutive year of comparable top-line growth when excluding contract manufacturing sales tied to divested pet food brands.
Fourth-Quarter Sales and Profit Growth
Marshall said comparable net sales also increased 6% in the quarter, including a 10 percentage point benefit from net price realization, primarily in coffee and sweet baked goods. Volume mix reduced comparable net sales by four percentage points, reflecting declines in coffee and sweet baked goods that were partially offset by growth in Uncrustables sandwiches.
Adjusted gross profit increased $31 million, or 4%, as higher pricing helped offset higher costs, including commodity costs and tariffs, and unfavorable volume mix. Marshall said the company recorded approximately $23 million in tariff expense during the quarter, primarily affecting the U.S. Retail Coffee segment.
Adjusted operating income increased $60 million, or 14%, as higher gross profit and favorable selling, general and administrative expenses outweighed higher general and administrative costs. Net interest expense declined $6 million because of reduced debt outstanding.
Coffee, Uncrustables and Away From Home Drive Momentum
The U.S. Retail Coffee segment posted a 12% increase in net sales. Marshall said higher net pricing across the portfolio contributed 21 percentage points to sales growth, while volume mix reduced sales by eight percentage points because of declines in Dunkin’ and Folgers, partially offset by growth in Café Bustelo. Segment profit rose 1% as higher pricing and lower marketing spending were mostly offset by higher costs, including commodities and tariffs, and unfavorable volume mix.
Mark Smucker said the company has been able to recover higher coffee commodity costs through “responsible pricing” and noted that price elasticity trends have been favorable compared with initial expectations. He added that green coffee costs are beginning to moderate, supported by early positive indications for this year’s crop. The company has started lowering prices through trade investments and has planned a list price decrease if deflation persists.
In U.S. Retail Frozen, Handheld and Spreads, net sales increased 1%. Uncrustables net sales rose 8% in the quarter, its strongest quarterly growth rate of the fiscal year. Segment profit increased 37%, helped by lower marketing spending, higher pricing, lower costs and reduced pre-production expenses tied to a new Uncrustables manufacturing facility.
The Away From Home business, now a reportable segment after the company’s annual segment review, recorded a 15% increase in net sales. Excluding foreign currency exchange, net sales rose 14%. Growth was led by coffee, Uncrustables sandwiches, fruit spreads and pricing. Segment profit increased 21%.
Pet Foods and Sweet Baked Snacks Show Mixed Trends
U.S. Retail Pet Foods net sales increased 2%, with cat food strength partially offset by dog snacks weakness. Mark Smucker said Meow Mix accelerated in the quarter with 8% net sales growth, and the company continued to gain dollar share in dry cat food, which represents about 85% of its cat food portfolio.
Dog snacks declined 1% in the quarter. Mark Smucker said Pup-Peroni is beginning to stabilize, while Milk-Bone declined primarily because of softness in biscuits. He said Milk-Bone remains a key focus and that the company is working to reignite growth through packaging updates, premium offerings and e-commerce.
Sweet Baked Snacks net sales decreased 5%, or 4% excluding non-comparable sales tied to divested value brands. Volume mix reduced sales by 12 percentage points, mainly from decreases in snack cakes and breakfast items, partially offset by donuts. Higher net pricing added eight percentage points. Segment profit increased 45%, reflecting pricing and lower marketing spend, partly offset by unfavorable volume mix and higher costs.
Mark Smucker said fourth-quarter sweet baked snacks sales exceeded expectations because production returned faster than anticipated after a February fire at the company’s Emporia, Kansas, facility. Hostess Donettes grew net sales 13% in the quarter, driven by both pricing and volume mix growth.
Fiscal 2027 Outlook Calls for Lower Sales but Higher Earnings
For fiscal 2027, the company expects net sales to decline 3% to 4%, primarily because of lower pricing tied to anticipated green coffee deflation and lower volume mix. Management said lower coffee costs are expected to pressure sales but support profitability.
Adjusted earnings per share are expected to be $9.75 to $10.25, representing a 7% to 12% increase from the prior year. Free cash flow is projected at $1 billion. The outlook does not assume impacts from new tariffs, changes to existing tariffs or tariff refunds.
Marshall said the company expects adjusted gross profit margin to expand by roughly 300 basis points to about 38%, reflecting lower commodity and tariff costs, primarily green coffee, as well as productivity savings. SG&A expenses are expected to rise about 5%, including increased marketing investments behind key growth platforms.
The company’s key growth platforms for fiscal 2027 are Uncrustables, Café Bustelo, Meow Mix and Milk-Bone. Mark Smucker said the company expects volume growth across each of those brands.
Debt Reduction Remains a Priority
J. M. Smucker generated $1.2 billion in free cash flow in fiscal 2026, up $340 million from the prior year. The company returned approximately $465 million to shareholders through dividends and paid down $720 million in debt. It ended the year with $59 million in cash and cash equivalents and $6.9 billion in total net debt.
Marshall said the company’s leverage ratio stood at 3.8 times based on trailing 12-month adjusted EBITDA of approximately $1.8 billion. Management plans to pay down about $500 million of debt in fiscal 2027 and expects leverage to approach 3 times net debt to adjusted EBITDA by the end of the fiscal year.
Mark Smucker said the company will continue prioritizing organic growth investments, debt reduction, dividends and potential share repurchases while maintaining its investment-grade debt ratings. He also noted that the company has increased its dividend for 24 consecutive fiscal years.
About J. M. Smucker (NYSE:SJM)
The J. M. Smucker Company is a diversified food and beverage manufacturer and marketer known for a portfolio of well-established consumer brands. The company’s main business activities include the production and distribution of fruit spreads, peanut butter, coffee and coffee filters, as well as pet food and pet snacks. Smucker’s core product lines serve both retail and foodservice customers through grocery chains, mass merchandisers, club stores, convenience outlets and e-commerce channels.
Among its leading brands are Smucker’s® fruit spreads, Jif® peanut butter, Folgers® and Dunkin’® coffees, and Café Bustelo® coffee.
