Following 2022 when consumer demand for store branded products grew, TreeHouse Foods sees more opportunity for growth in 2023 and has sharpened its focus to further expand its assortment of private label products.
During its fourth quarter and year-end investor conference call, company officials said TreeHouse has “a clear purpose and strategic ambition” to drive long-term growth across its private label snacking and beverage categories.
“We believe we can grow revenue 3% to 5% on an annual basis based on the portfolio as it is constructed today,” said Steve Oakland, president and CEO of TreeHouse. “We have the right team in place and our portfolio has never been better positioned to win and drive sustainable growth.”
Noting that the pressure on today’s consumers remains significant, he said that shoppers continue to seek value and the value proposition offered by private label products continues to gain momentum.
Playing a major role in TreeHouse’s effort to expand its private label assortment is the company’s ability to hit target levels of service. While continuing to face challenges in certain categories such as cookies, creamer and single-serve beverages, TreeHouse officials expect most of its categories to be close to its target service level of 98%.
“We exited 2022 with about 93%-94% service in the fourth quarter,” said Patrick O’Donnell, TreeHouse’s chief accounting officer. “We expect that to continue to move up even though we’re still seeing some pockets of labor challenges and a little bit of material availability.”
He noted the aforementioned challenges were the motivating factors behind the $130 million in capital expenditures the company has earmarked for 2023. About half that spending will be focused on growth and supply chain initiatives in areas such as capacity expansion and innovation capabilities. The other half is targeting infrastructure and maintenance.
The bullish position TreeHouse is taking with future private label growth follows a strong fourth quarter that saw sales rise 22% to $996.2 million. Net income for the quarter was $40.1 million compared to a net loss of $30.8 million in the comparable quarter the previous year.
For the full year ended Dec. 31, the company reported net sales of $3.454 billion, up from net sales of $2.946 billion in the prior fiscal year. Net loss for the year was $146.3 million compared to a net loss of $12.5 million in the prior fiscal year.