Jif recall to cost $175 million, but Smucker price increases boost revenue
J.M. Smucker reported Tuesday that its sweeping Jif peanut butter recall would cost about $175 million, but the company said its business is still humming largely due to price increases.
Driving the news: Smucker’s stock on Tuesday regained some ground it had lost since the mid-May recall, closing up 5.8% at $130.31, as investors cheered the better than expected results, despite the Jif recall price tag.
- The recall due to potential salmonella contamination will cause Smucker’s sales to be 2% lower than otherwise expected in the 2023 fiscal year, as the company deals with a production outage and customer returns.
- “This will be a big headwind in their upcoming fiscal year,” CFRA Research analyst Arun Sundaram tells Axios.
Yes, but: The company said it expects an 8% sales increase in 2023 when factoring out the Jif impact.
What we’re watching: Whether Smucker can maintain market share in peanut butter with Jif production hampered until its Lexington, Kentucky, factory can get back online.
- “There’s lots of different store brands out there, lots of generic brands, lots of competition in general,” Sundaram says. “So this is not a category where you want to experience a large recall like this, because it could have long term implications. If consumers substitute that brand for another one, they may stick with that new brand.”