PARSIPPANY, NJ. — B&G Foods, Inc. executives expect current consumer trends to persist beyond the pandemic. The company’s portfolio, which includes Cream of Wheat, Green Giant and Ortega, is well-positioned to benefit from increased eating and cooking at home, said Kenneth G. Romanzi, president and chief executive officer.
“It’s really about everybody feeling that the post-pandemic world is not going to be the same as the pre-pandemic world, even if there’s a virus vaccine tomorrow,” Mr. Romanzi said during a July 30 earnings call. “As long as people are going to be at home just a little bit more, that’s positive trends for categories like we have in vegetables and baking and spices and seasonings and breakfast. I mean, the breakfast portfolio is a perfect example as people are home, where we’re seeing hot cereal still growing 30% to 40% consumption in more summer months versus a year ago.”
B&G Foods net income for the second quarter ended June 27 totaled $44.9 million, equal to 70¢ per share on the common stock, up 146% from $18.3 million, or 28¢ per share, in the prior-year period. Adjusted net income, which excludes acquisition and divestiture related and non-recurring expenses, and the impact of an inventory reduction plan in the year-ago quarter, increased 88% to $46 million from $24.5 million.
Net sales surged to $512.5 million, up 38% from $371.2 million the year before.
“Our sales performance was driven by very strong base business volume growth, pricing and some M&A benefit,” Mr. Romanzi said. “During the second quarter, we experienced tremendous strength in almost all of our brands, with 85% of our brands growing in net sales versus a year ago, including Green Giant, Ortega, Clabber Girl, Cream of Wheat, McCann’s, Grandma’s Molasses and Victoria, to name a few… Incredibly, a number of our brands doubled in net sales versus year ago for the quarter, including Bear Creek, Joan of Arc and Mama Mary’s. For the most part, our brands with more foodservice exposure did not grow at high rates, but those same brands did have very strong retail consumption.”
Green Giant, the company’s largest brand, grew 45% with strong consumption gains in shelf-stable vegetables as shoppers packed their pantries in the earlier stages of the pandemic.
“Frozen vegetables as a category, while growing nicely, didn’t quite keep up with the center-store shelf-stable categories due to less space for consumers to stock up,” Mr. Romanzi said. “But the category did increase a healthy 22% in consumption versus last year.”
Additionally, B&G Foods’ brands are attracting new shoppers, he said.
“As measured by Nielsen, 2.6 million new households purchased our brands since COVID struck, a 3% increase across our portfolio, with some brands like Underwood increasing new households by as much as 18%,” Mr. Romanzi said. “Encouragingly, these new buyers appear to have a strong appetite to continue buying our brands as the repurchase intent or the percent of new buyers who plan to buy again remains high.”
The company also is poised to benefit from an increase in online grocery shopping. E-commerce sales represent approximately 3% to 5% of total net sales and are growing rapidly, inclusive of click-and-deliver and click-and-collect models across its retail customers. The company’s Amazon business grew 340% over the prior year for the quarter and more than 330% year-to-date versus last year, Mr. Romanzi said. B&G Foods intends to shift more investment to e-commerce to continue capturing momentum.
“Our goal this year was to be fully e-commerce capable by year-end, but we’re ahead of our internal timeline, and we expect to be fully capable by the beginning of the fourth quarter,” he said. “We’ve experienced tremendous growth in e-commerce sales year-to-date without even being fully e-commerce capable, so we expect even stronger trends going forward.”
Management declined to provide full-year guidance due to the uncertainty related to the virus and its impact on markets. For the first six months of the year, B&G Foods earned $73 million, or $1.14 per share, up from $35 million, or 54¢, the same period of the previous year. Net sales advanced to $961.9 million from $783.9 million.
Shares of B&G Foods trading on the New York Stock Exchange closed July 31 at $28.91, up 4.8% from the day before.