JM Smucker Serves Up Underbaked Sales as Hostess’s Little Treats Go Stale

People keep drinking coffee, even in tough economic times, but they skip the mini donuts. Folgers-owner JM Smucker reported its net sales rose 7% in the most recent quarter, boosted by pricier coffee due to tariffs and harsh weather conditions. 

But Donettes- and Twinkies-maker Hostess, which Smucker acquired for $5.6 billion in 2023, is struggling. Comparable revenue in Smucker’s sweet baked goods sector fell 11%.

The Uncrustables purveyor, which also expects profits to take a hit from a recent fire at one of its manufacturing facilities, narrowed its full-year sales growth forecast to 3.5% to 4%. That’s down from a range that previously topped out at 4.5%. 

Cleanup in Aisle 3

Smucker is under pressure to sweeten its sales from activist Elliott Investment Management, which revealed yesterday that it’s one of the 128-year-old PB&J company’s biggest stakeholders. Smucker agreed to add two new members to its board, including the former CEO of snackmaker Snyder’s-Lance.

The food company was already in the midst of a turnaround effort. But Mark Smucker, the CEO and great-great-grandson of founder Jerome Monroe Smucker, said last week that turning around the business’s sweets segment is taking longer than expected.  

Smucker recently upped its efforts:

• Smucker plans to reduce its Hostess sweet treats by 25% and limit product promotions. The CEO said it also expects to save $30 million by shutting down an Indianapolis plant. And earlier this month, Smucker shook up its C-suite, parting ways with its COO, creating a CTO position and expanding its CFO’s responsibilities to include spreads and frozen handhelds. 
• Speaking of the freezer section, not all little treats are struggling. Uncrustables are still a hit for Smucker, which expects the PB&J pockets to make $1 billion in sales this fiscal year. Uncrustables are now also available in a fridge-friendly version. 

Stale Sales: Elliott is also shaking up Doritos-owner PepsiCo after building up a $4 billion stake in the snack and soda company. Under the activist’s influence, PepsiCo is scaling back its product lines and slashing prices to try to turn around a snacks biz that has suffered as customers switch to healthier options and smaller sizes. Shoppers have gotten pickier about which snacks they’ll splurge on, and PepsiCo said last week its price cuts are already starting to pay off.