The earning were inline with consensus but the revenue number beat both consensus and the street high estimates.
The big picture was that retail products (80%+ of their business) are doing very well overall and are up double digits. Their comment was that the trend of cooking at home is very strong. On the other hand, their food service segment (<20% of their business) was down double-digits. Their view is that the restaurant industry has not seen the worst of it, yet. I'm thinking of shorting a little SYY on this info.
Specific successes were Ortega (their biggest brand) which was up double-digits and gaining share from the #3 brand in the category. The Sponge Bob (Ortega and Cream of Wheat) products are doing particularly well and they plan to add a new Cream of Wheat product to go into dollar stores later this year. The Polaner sugar free products drove a 20% increase for that brand, even ahead of any advertising efforts. I don't think anybody asked if that was just a stocking/inventory effect due to it being a new product so I'd be wary of that. But they did say that the uniqueness of this new product led to placement of Polaner with retailers that hadn't carried the brand at all before which is obviously extremely positive.
All the brands did OK except for B&M beans and B&G pickles. They were both down and they attributed it to poor weather in the northeast (where the brands do most of their sales) and them possibly needing to look at adjusting their B&M promotional pricing to be more inline with their competitor, Bush.
Walmart's SKU reduction effort has helped B&G in some areas by removing competition (syrup) but hurt in others where they have had their products removed from shelves. Overall they are growing with Walmart but the rate of growth is slower overall due to the SKU reductions. They said that WalMart was pretty much done with additional reductions so most of the impact was already felt in this last quarter.
Input costs have come down and they expect them to continue coming down in several categories (beans was the example given). The question was asked if they would need to lower price as a result. They said price wouldn't need to be reduced as much as the reduction of input costs (because they didn't raise price as much when the costs were going up) so this should continue to be a tailwind for them in the coming quarters.
Just finished listening to the replay. The Ortega line was outstanding! Of interest, I think I heard Cream of Wheat was up 8%.
You gave a good recap. One item though.
On the B&M beans and B&G pickles, what I remember hearing was that it was a combination of poor weather, (vendor allowance strategy and/competition vs. Bushes) and a rationalization of their new warehousing. They said both were doing very well until the weather turned cool/wet in the northeast this summer. On the warehousing I seem to remember that as it was rationalized they had an absolute decrease in stockages. On a positive note, they said that the new PA facility was already having a positive impact on shipping costs.
I was also interested in the number of questions concerning the WMT SKU reduction initiative. My impression was that management said it was having mixed results with some brands being the beneficiaries (from competitors being dropped) and others loosing out (such as Joan of Arc) being on the fringe in other WMT outlets.
I was also interested in the sharp rise in share based/productivity employee compensation.
I found the comments about Walmart interesting. It validated my comments that I posted on the BGF board in early September that was based on my inspection of a SuperWalmart in PA. I'll have to get out there again to keep tabs. I do not think pricing on B&M is the problem. Promotional pricing on B&M is always less than Bush's. As an example, I was buying 28oz B&M cans for 1.00 to 1.25 when on sale this summer. I never see Bush's for less than 1.67. So I'm not sure what the problem is there although I thought it was one of the brands I saw less shelf space at Walmart. B&G might be a price issue. Mt.Olive's sale price is usually lower out by me. As for compensation, remember that these guys had the class not to take one last year. I just read an annual report from a local bank that lost money on loan write downs, yet management was awarded the maximum bonus and the economy was blamed for the loan write downs.