Smucker Shares Fall as Sales Dip and Cash Flow Turns Negative
Despite beating expectations and raising its annual forecast, the company's stock slid after reporting a 22% drop in quarterly earnings per share.
Shares in The J.M. Smucker Co. (NYSE: SJM) fell on Wednesday after the food producer reported a decline in quarterly sales and a significant swing to negative free cash flow, overshadowing an optimistic outlook for the rest of the year.
The maker of Folgers coffee, Jif peanut butter, and Uncrustables frozen sandwiches announced first-quarter net sales for fiscal 2026 fell 1% to $2.1 billion. The company reported a net loss of $0.41 per share, while adjusted earnings per share plunged 22% to $1.90, a figure that nonetheless met analysts' expectations.
Investors reacted to a stark reversal in cash flow, with the company reporting a negative free cash flow of $94.9 million for the quarter ended July 31. This compares to a positive cash flow of $49.2 million in the same period a year ago, a shift the company attributed primarily to lower net income.
Despite the headline declines, which were impacted by recent divestitures of its Voortman and certain sweet baked snack brands, the company's comparable net sales increased by 2%, driven by higher prices for its coffee products. CEO Mark Smucker framed the results as exceeding internal expectations, citing "continued momentum of the business" and "strong top-line growth."
"Our results reflect strong top-line growth, driven by consumer demand for our portfolio of leading brands, and bottom-line results that reflect disciplined cost management and execution," Smucker said in a statement.
Buoyed by this performance, particularly in its coffee segment, Smucker's raised its full-year financial outlook. It now projects net sales to increase by 3.0% to 5.0%, up from previous estimates. However, the company maintained its adjusted earnings per share guidance of $8.50 to $9.50, citing the offsetting impact of higher U.S. tariffs on green coffee costs.
The market appeared to focus more on the current challenges than the brighter forecast. The stock declined 4.14% in premarket trading following the announcement. The sharp drop in adjusted earnings and the negative cash flow figure fueled concerns about profitability, particularly as the company navigates higher commodity costs and ongoing inflation.