The J.M. Smucker Co. Reports Fiscal 2026 Third Quarter Results
The J.M. Smucker Co. (NYSE: SJM) announced financial results for the third quarter ended January 31, 2026, marking continued progress in its fiscal 2026 performance despite a dynamic operating environment. The quarterly results reflect the impact of portfolio reshaping actions, including the divestiture of certain Sweet Baked Snacks value brands completed on March 3, 2025, and the earlier divestiture of the Voortman business on December 2, 2024. Unless otherwise noted, comparisons are made against the third quarter of the prior fiscal year.
Executive Summary
Net sales for the quarter totaled $2.3 billion, representing an increase of $153.4 million, or 7 percent, compared to the prior-year period. When excluding $26.3 million of noncomparable net sales related to divestitures in the prior year and $2.0 million in favorable foreign currency exchange, comparable net sales increased $177.7 million, or 8 percent. The growth was primarily driven by higher net price realization, especially in the coffee category, partially offset by lower volume/mix in select segments.
On a GAAP basis, the company reported a net loss per diluted share of $6.79. This loss was largely attributable to noncash impairment charges related to the Sweet Baked Snacks reporting unit. Adjusted earnings per share came in at $2.38, reflecting a 9 percent decline compared to the prior year but exceeding internal expectations.
Cash flow performance improved significantly. Cash provided by operating activities reached $558.5 million, compared to $239.4 million in the prior-year quarter. Free cash flow totaled $487.0 million, a substantial increase from $151.3 million in the previous year. The company also updated its full-year fiscal 2026 outlook, reaffirming confidence in its broader strategic direction.
CEO Commentary
Mark Smucker, Chief Executive Officer, President, and Chair of the Board, emphasized the company’s resilience and strategic execution. He noted that the business delivered strong third-quarter results in a dynamic external environment, with both net sales and adjusted earnings per share surpassing expectations.
According to Smucker, the strength of the company’s portfolio of leading brands, coupled with disciplined cost management, contributed meaningfully to the quarter’s performance. He reiterated the company’s focused strategy of engaging consumers in attractive categories, strengthening beloved brands, and ensuring broad retail presence across channels.
Looking ahead, management remains confident in achieving fiscal 2026 objectives. The company continues to prioritize top-line growth, profitability enhancement, and long-term shareholder value creation, supported by its leadership team and strategic framework.
Net Sales Performance
Comparable net sales growth of 8 percent was primarily driven by a 10 percentage point contribution from net price realization. Coffee pricing was the principal driver of pricing gains. However, volume/mix reduced comparable net sales by approximately 2 percentage points. Volume declines were mainly seen in sweet baked goods and fruit spreads, along with lapping contract manufacturing sales related to previously divested pet food brands. These declines were partially offset by growth in Uncrustables sandwiches, which continued to perform well.
Overall reported net sales increased 7 percent year over year, reflecting the combined impact of pricing strength, portfolio changes, and modest currency tailwinds.
Profitability and Operating Income
Gross profit declined by $50.3 million, or 6 percent, compared to the prior-year quarter. The decrease was driven primarily by higher commodity costs and tariffs, along with unfavorable volume/mix. These pressures were partially offset by higher net price realization.
Operating loss decreased $45.6 million, or 8 percent, versus the prior year. The improvement largely reflected the absence of a $50.2 million net pre-tax loss on divestitures recorded in the prior-year quarter and a $40.8 million reduction in impairment charges associated with goodwill of the Sweet Baked Snacks reporting unit and the Hostess trademark. These benefits were partially offset by the decline in gross profit.
Adjusted gross profit declined $28.4 million, or 3 percent, as the company excluded changes in cumulative unallocated derivative gains and losses and special project costs from GAAP results. Smucker Adjusted operating income decreased $32.2 million, or 7 percent, reflecting lower gross profit but excluding impairment charges, amortization, special project expenses, and prior-year divestiture losses.
Interest Expense and Income Taxes
Net interest expense remained comparable to the prior year. The effective income tax rate for the quarter was (11.1) percent, compared to 0.0 percent in the prior year. Smucker Both periods included tax impacts related to goodwill impairment charges in the Sweet Baked Snacks reporting unit.
The decline in the effective tax rate was primarily driven by tax impacts associated with the integration of Hostess Brands and the completion of the Voortman divestiture in the prior year. On an adjusted basis, the effective income tax rate was 24.3 percent, slightly above the prior year’s 23.7 percent, due to additional withholding taxes related to repatriation of foreign cash.
Cash Flow and Balance Sheet
Operating cash flow significantly improved to $558.5 million, largely due to reduced working capital requirements and lower cash payments for income and other taxes. These improvements were partially offset by lower adjusted net income.
Free cash flow reached $487.0 million, reflecting higher operating cash flow and lower capital expenditures compared to the prior year. The company continues to focus on disciplined capital allocation, debt management, and liquidity preservation while investing strategically in growth initiatives.
Fiscal 2026 Outlook
The company updated its fiscal 2026 guidance to reflect current operating conditions. The midpoint of the net sales guidance range was adjusted to account for the estimated impact of a recent fire at its Emporia, Kansas manufacturing facility in February. Despite this event, management maintained its adjusted earnings per share and free cash flow expectations.
Net sales for the full fiscal year are expected to increase between 3.5 percent and 4.0 percent versus the prior year. This outlook includes a $134.7 million impact from divestitures of the Voortman business and certain Sweet Baked Snacks value brands. Comparable net sales are projected to grow approximately 5.0 percent to 5.5 percent, driven by higher net price realization and partially offset by volume/mix declines. The outlook also reflects a $38.0 million reduction in contract manufacturing sales tied to divested pet food brands, as that agreement concluded at the end of fiscal 2025.
Adjusted earnings per share are expected to range from $8.75 to $9.25. The guidance assumes adjusted gross profit margins of approximately 35.0 percent, selling, distribution, and administrative expenses flat to slightly down year over year, interest expense of roughly $380.0 million, an adjusted effective tax rate of 24.0 percent, and 106.9 million weighted-average common shares outstanding.
Free cash flow is projected to be approximately $975.0 million at the midpoint of adjusted EPS guidance, with capital expenditures estimated at $325.0 million. Management reiterated confidence in delivering sustainable growth, operational efficiency, and long-term value creation throughout fiscal 2026.
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