Smucker Swings to 20% Profit Growth as Frozen Handhelds and Pet Food Surge
The food maker's adjusted earnings per share reached $2.77 in the fiscal fourth quarter, rebounding from three consecutive quarters of double-digit declines.
J M Smucker (SJM), the packaged-food maker, posted a 20% jump in adjusted earnings per share for its fiscal fourth quarter, marking a sharp reversal from a year of profit erosion that had defined much of fiscal 2026. The result capped a year in which full-year adjusted EPS fell 10% to $9.15, dragged lower by commodity costs and tariff pressures, but the fourth-quarter trajectory signaled that margin headwinds were easing.
Net sales for the quarter ended April 30 rose 6% to $2.3 billion, driven by 10 percentage points of net price realization that more than offset a 4 percentage-point drag from volume and mix. The top-line acceleration built on 3% growth in the second quarter and a 1% decline in the first, as pricing actions taken earlier in the year flowed through to results. Adjusted operating income climbed 14% to $482.1 million, rebounding from declines of 7%, 20%, and 17% in the preceding three quarters.
The margin story was one of sequential recovery rather than year-over-year expansion. Adjusted gross margin came in at 36.8%, down from 37.5% a year earlier but well above the 33.8% trough recorded in the third quarter, as cost pressures that had peaked mid-year began to relent. Selling, distribution, and administrative expenses fell 6% to $357.8 million, shrinking to 15.8% of sales from 17.8% a year ago, as cost discipline held across all four quarters.
Segment results diverged sharply. U.S. Retail Frozen Handheld and Spreads profit surged 37%, with margin expanding 730 basis points to 27.5%, while U.S. Retail Pet Foods profit grew 18% and margin widened 450 basis points to 31.3%. The Sweet Baked Snacks unit, which had suffered profit declines exceeding 50% in each of the prior three quarters, swung to 45% profit growth with margin reaching 12.2%, even as its sales slipped 5%. The newly elevated Away From Home segment posted 15% sales growth and 21% profit growth, lifted by Uncrustables and coffee volume.
Coffee remained a pressure point. U.S. Retail Coffee net sales grew 12% to $830.6 million on 21 percentage points of pricing, but an 8 percentage-point volume and mix headwind from Dunkin' and Folgers declines compressed segment margin to 25.8% from 28.6% a year ago. The margin erosion, while less severe than the third quarter's 630-basis-point drop, extended a pattern that has persisted all year.
Cash generation strengthened meaningfully. Fourth-quarter free cash flow reached $483.9 million, up 62% from a year earlier, bringing the full-year total to $1.2 billion, a 47% increase. Smucker repaid $720 million in debt during the year, reducing long-term obligations to $6.39 billion from $7.04 billion.
For fiscal 2027, the company projected net sales to decline 3% to 4% while adjusted EPS is expected to rise to $9.75 to $10.25, implying 7% to 12% growth. Adjusted gross margin is forecast at roughly 38.0%, and free cash flow is targeted at approximately $1.0 billion. The guidance assumes SD&A expenses will increase about 5%, reversing the cost-cutting trend of the prior year, while interest expense is expected to decline to roughly $345 million.