PENNSAUKEN, NJ. — Churros could lead J&J Snack Foods Corp.’s sales growth in fiscal 2023.
“Churros are one of the fastest growing snack categories in foodservice, and we couldn’t be more excited to launch our new churro brand, Hola Churros, this quarter, backed by a full suite of marketing tools. sales and videos,” said Dan Fachner. , president and chief executive officer, on a Nov. 15 earnings call to discuss results for the fiscal year ended Sept. 24. “We look forward to reporting progress with this new brand in the coming quarters.”
He added that Pennsauken-based J&J Snack Foods launched SuperPretzel buffalo-flavored filled snacks in the fourth quarter ending Sept. 24 and will introduce Bavarian SuperPretzel sticks and pretzel nuts in fiscal 2023.
Net earnings of $47.2 million, equal to $2.47 per share in common stock, for the fiscal year were 15% lower than $55.6 million, or $2.92 per share, in the previous fiscal year. Net sales of $1.38 billion increased 21% from $1.14 billion. Operating expenses increased to 22.3% of sales, up from 19.9% in fiscal 2021. The increase reflected increases in freight and distribution costs, salary increases and increases in administrative costs.
Foodservice sales increased 20% to $872.7 million, led by frozen novelties, churros, handhelds, pretzels and bakery. Frozen novelties benefited from the acquisition of Dippin’ Dots. Retail sales grew 7% to $197.9 million, driven by soft pretzels and frozen novelties. Frozen drink sales increased 32% to $310 million as more consumers visited amusement parks, live event venues, convenience stores, restaurants and retail stores.
In the fourth quarter, net earnings of $17.3 million, or 90 cents per share, were down 8% from $18.9 million, or 99 cents per share. Net sales increased 24% to $400.4 million, up 24%.
Foodservice sales for the quarter increased 29% to $256.7 million, which included $31.5 million in Dippin’ Dots sales.
“Churros grew 38% during the quarter as we continue to focus on market opportunities and reposition the brand for continued growth,” said Mr. Fachner. “Portable devices grew 44%, with bakery and soft pretzels delivering strong growth in the quarter.”
Fourth quarter sales in the retail segment increased 11% to $53.5 million. Sales of soft pretzels increased 30%, while other sales increases were 26% for portable devices and 7% for frozen novelty products. Sales of frozen drinks in the quarter were $90.2 million, an increase of 18%.
“All three of our segments (in the fourth quarter) grew above 2019, and we’ve used that kind of pre-COVID proxy, but it gives you a general idea that all three business segments are really doing well. independent of adding Dippin’ Dots,” said Ken Plunk, CFO.
Operating expenses in the fourth quarter increased to $94.2 million and represented 23.5% of sales, compared to 20.6% in the fourth quarter of last year.
“These results largely reflect inflationary pressures across all of our expense lines, particularly distribution expenses,” Plunk said. “Distribution expenses were 12.4% of sales compared to 10.1% in fiscal 2021, but improved compared to the third quarter of 2022, which was 12.7%.”