J. M. Smucker’s second quarter results were met with a negative market reaction, reflecting investor concern over flat sales and margin compression. Management pointed to ongoing challenges in key categories, notably weaker sales volumes and higher input costs. CEO Mark Smucker highlighted the impact of increased tariffs on green coffee and shifting consumer habits, especially in discretionary categories like pet snacks, as key factors weighing on performance. Additionally, Sweet Baked Snacks faced volume headwinds due to SKU rationalization, while the company’s efforts to optimize pricing in coffee partially offset cost pressures.
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J. M. Smucker (SJM) Q2 CY2025 Highlights:
- Revenue: $2.11 billion vs analyst estimates of $2.12 billion (flat year on year, in line)
- Adjusted EPS: $1.90 vs analyst expectations of $1.93 (1.4% miss)
- Adjusted EBITDA: $455.3 million vs analyst estimates of $436.9 million (21.5% margin, 4.2% beat)
- Management reiterated its full-year Adjusted EPS guidance of $9 at the midpoint
- Operating Margin: 2.2%, down from 16.4% in the same quarter last year
- Organic Revenue rose 2% year on year vs analyst estimates of 2.2% growth (21.9 basis point miss)
- Sales Volumes fell 4% year on year (1% in the same quarter last year)
- Market Capitalization: $11.67 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From J. M. Smucker’s Q2 Earnings Call
- Andrew Lazar (Barclays) questioned the updated impact of tariffs on coffee pricing. CFO Tucker Marshall explained that additional pricing actions would be required to offset tariffs, and that elasticity is expected to worsen with each subsequent increase.
- Peter Galbo (Bank of America) asked about the drivers behind sequential improvement in Milk Bone, specifically whether this was due to easier comparisons or actual consumption trends. CEO Mark Smucker clarified that both factors are at play, with seasonal innovation and targeted promotions supporting brand growth.
- Robert Moskow (TD Cowen) inquired about Sweet Baked Snacks volume declines and the effect of SKU rationalization. Mark Smucker confirmed that the rationalization did not impact first-quarter volume but should benefit profitability over time.
- Tom Palmer (JPMorgan) sought clarity on the cadence of profit improvement and the expected timing of savings from bakery closures. Tucker Marshall specified that some cost benefits will begin in the fourth quarter, with the majority realized in the following year.
- Alexia Howard (Bernstein) questioned the ongoing risk from GLP-1 weight loss drugs. Mark Smucker responded that research to date shows no significant impact on the company’s core categories, but the company will remain vigilant and adapt if necessary.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will be watching (1) the effectiveness of further coffee pricing actions and the impact on both volumes and margins, (2) the realization of cost savings from SKU rationalization and bakery closures in Sweet Baked Snacks, and (3) any shifts in consumer spending patterns, especially as related to discretionary categories and potential regulatory changes around tariffs. The pace of market recovery in pet and snack brands will also be closely monitored.
J. M. Smucker currently trades at $109.28, in line with $110.37 just before the earnings. Is there an opportunity in the stock?See for yourself in our full research report (it’s free).
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