J. M. Smucker (NYSE:SJM) said its fiscal 2027 first-quarter performance reflected momentum in its coffee, Uncrustables, pet snacks and selected sweet baked snacks businesses, while management maintained a cautious view on consumer demand, commodity costs and freight inflation for the remainder of the year.
During the company’s earnings question-and-answer session, Chief Executive Officer Mark Smucker said the company’s portfolio and ongoing brand investments support its long-term growth outlook. Chief Financial Officer Tucker Marshall said the company’s guidance incorporates higher underlying cost inflation and conservative volume assumptions for coffee.
Tariff Refund Supports Investment and Debt Reduction
The company expects a roughly $0.60 full-year benefit from the tariff refunds after accounting for incremental costs and spending, according to Marshall. He said the company also intends to use remaining earnings or cash to reduce debt.
Marshall said J. M. Smucker remains on track to pay down approximately $500 million of debt during fiscal 2027 and has already reached its targeted 3x leverage ratio in the first quarter, ahead of expectations. The company remains committed to its quarterly dividend, which it recently increased, and now has flexibility to consider share repurchases, he said.
Coffee Outlook Remains Cautious Despite First-Quarter Growth
Management said coffee delivered strong first-quarter results across its key brands, although the company continues to expect low-single-digit volume declines for the full fiscal year. Smucker cited continued volatility in green coffee commodities, category conditions and the consumer environment as reasons for maintaining a prudent outlook.
Smucker said Café Bustelo grew 23% during the quarter, supported by its Game Face marketing campaign tied to soccer. He described the brand as having significant opportunity for distribution expansion in the central and western U.S. regions, noting that it is now the sixth-largest brand in the category and that the company aspires to move it into the top four.
The company had considered a coffee list-price decline near the end of the fiscal year because the base coffee commodity is lower than a year earlier. However, Smucker said commodity prices have not crossed the thresholds needed to support a list-price reduction and have not shown sustained deflation. Instead, the company has passed some deflation through to consumers through trade spending and promotions.
Folgers grew during the quarter and posted approximately flat volume and mix, Marshall said. Smucker also said Folgers, one of the company’s more affordable coffee brands, performed well around promotional activity tied to America’s 250th anniversary during July.
Underlying cost inflation, excluding the effects of green coffee tariffs and tariff refunds, is now expected to be in the mid-single digits. Marshall said the increase from the company’s earlier expectations is largely attributable to freight, commodities and other ingredients.
Uncrustables Growth Accelerates, McCalla Costs Rise
J. M. Smucker raised its outlook for Uncrustables to high-single-digit growth for fiscal 2027, compared with its prior expectation for mid-single-digit growth after the brand reached its $1 billion ambition in the previous fiscal year.
Marshall said the stronger outlook is driven primarily by U.S. retail channels, with improvement also coming from away-from-home sales. The company is increasing pre-production expenses to bring capacity online earlier at its McCalla, Alabama, facility. As a result, margins in the frozen handheld and spreads segment may decline modestly during the next few quarters, although Marshall said the overall margin profile remains strong.
Smucker said demand has been supported by the rollout of “fridge-friendly” Uncrustables, which can be kept thawed in a refrigerator for five days, as well as new flavors, limited-time offerings, higher-protein products and expanded distribution. The company is also building its convenience-store presence and growing its away-from-home business.
The second phase of the McCalla facility has already been built, Smucker said, and will focus on the brand’s core crimped soft-bread format. Activating the capacity will require staffing and operational startup.
Pet and Sweet Baked Snacks Show Mixed Trends
In pet snacks, Smucker said Pup-Peroni posted 5% net sales growth and 7% growth in the quarter, supported by a brand refresh, marketing and customer events. Milk-Bone returned to volume growth, aided by innovation in soft and chewy products and marketing support. Jerky Treats declined during the period.
Smucker said the company remains positive on dog snacks and continues to focus on growing Milk-Bone’s relevance in treating occasions. The company’s broader pet strategy remains centered on consumables, including dog snacks and cat food, rather than pet technology products or devices.
In sweet baked snacks, management said Hostess performed in line with expectations as the company continues its stabilization efforts. Donettes performed well, particularly in larger bag sizes and mini churro donut innovation, while Suzy Q’s innovation also showed positive performance.
However, Smucker said convenience-store traffic remains challenged. He suggested lower gasoline prices could eventually improve traffic by encouraging more consumers to enter stores after fueling, though he said the outcome remains uncertain. Marshall said the sweet baked snacks business is expected to decline by low single digits for the full year, with larger declines in the first half as the company laps prior-year SKU rationalization and a more stable back half.
Management also said it is supporting Jif through refreshed packaging, new marketing focused on snacking occasions and the launch of Jif Simply products with two or three ingredients. Smucker said the company does not view softness in the peanut butter category as structural and continues to see opportunities in both peanut butter and fruit spreads.
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.
