In the face of inflation and lower demand of private label overall, TreeHouse Foods reported a dip in net sales for the second quarter but remains optimistic as conditions will change.
"In the second quarter, we continued to navigate an unprecedented operating environment. We lapped last year's heightened COVID-related demand and took actions to offset the impact of inflation through pricing increases and to address supply chain disruptions,” said Steve Oakland, CEO of TreeHouse.
The Oak Brook, Ill.-based company said revenue hit $1 billion in the quarter compared with the COVID-impacted $1.04 billion generated a year ago.
“While macroeconomic factors have temporarily driven lower-than-expected consumer demand for private brands, we outperformed private label in the majority of our categories, as our service levels remain strong and we continue to engage our retail partners,” he added. “We have even greater resolve today to execute on our strategy, and we continue to believe the macro impact of government stimulus and other factors will be transitory. As the environment normalizes and inflation translates into higher prices, we believe the demand for private brands will return to its pattern of historical growth."
Net sales for the second quarter of 2021 totaled $1,003.2 million compared to $1,041.9 million for the same period last year, a decrease of 3.7%. Q2 organic net sales decreased 7.3%.
WIthin its meal preparation business, net sales declined $20.1 million or 3% in the second quarter, compared with last year’s significant increase in COVID-19 sales. Similarly, the snacking and beverages unit saw a decrease in net sales of $18.6 million or 5%.
The company noted strong headwinds, driven by the sale of its ready-to-eat cereal business that completed in June and is returning $25 million in capital to shareholders.
"Second quarter adjusted earnings per diluted share was $0.26, as lower selling, general and administrative expenses lessened the impact of lower than anticipated sales," said Bill Kelley, EVP and chief financial officer, TreeHouse, Oak Brook, Ill. "The decline in our gross profit margin in the quarter was driven by the timing lag between inflation and pricing initiatives. Pricing necessary to recover our initial expectations for commodity inflation this year has tracked according to our plans, and we anticipate the impact will increasingly be reflected in our results as we move through the second half of the year."
TreeHouse revised its full year 2021 guidance ranges and now expects $2.00 - $2.50 for adjusted earnings per diluted share from continuing operations and $4.20 to $4.45 billion of reported net sales.