JM Smucker shares dive after first quarter results

– Net sales of USA retail coffee are down 9 percent, to $513.3 million, compared with the first quarter of past year, because the company twice cut retail prices by 6 percent because its commodity costs dropped.

About 5.38 million shares of J.M. Smucker’s traded hands today, above the stock’s average trading volume of about 913,795 shares per day.

– Net sales of worldwide and foodservice brands declined 3 percent to $246 million, related to the loss of the US canned milk business and unfavorable currency exchange rates. Meow Mix saw a mid-single digit percentage decline.

However, the company is facing stiff competition from Mars Petcare and Nestle’s (NESN.S) Purina, the two dominant players that are vying for a bigger share of the $29 billion US pet-food pie by using promotions and discounts. Up to Monday’s close, they had risen more than 25 percent this year. Smucker even said earlier this year that retailers are increasingly looking at pet snacks as a new category separate from regular food, and are allocating more space to it.

“We are pleased with the start to our fiscal year as we delivered record first quarter earnings per share, which exceeded our expectations”, said Chief Executive Mark T. Smucker, in a written statement.

Despite the sales decline, Smucker said the pet food unit’s profitability rose as it cuts costs and benefited from lower and marketing commodity costs. It added that revenue from its top-selling Folgers and Café Bustelo was offset by a dip in Dunkin’ Donuts K-Cup pods.

In recent moves to diversify its business and respond to changing consumer preferences, Smucker a year ago bought Big Heart Pet Brands for about $3.2 billion, and in November agreed to sell its canned-milk business.

The J.M. Smucker Company announced results for the first quarter ended July 31, 2016, of its 2017 fiscal year.

-Revenue (Q1): $1.82 Bln vs. $1.95 Bln previous year. Street analysts expected the company to report EPS of $1.74.

The Company maintained its full-year fiscal 2017 earnings outlook, with adjusted earnings per share expected to range from $7.60 to $7.75. It previously forecast a 1 per cent increase.

Smucker’s shares were down 8.2 percent at $143.36 in afternoon trading on the New York Stock Exchange.