MOUNT LAUREL, NJ. — Growing retail demand for handhelds and soft pretzels helped fuel sales and earnings gains in fiscal 2024 at J&J Snack Foods Corp. In the fourth quarter, though, the company saw softer sales and profitability.

Net income of J&J Snacks in the year ended Sept. 28 was $86,551,000, equal to $4.45 per share on the common stock, up 10%, from $78,906,000, or $4.08 per share, in fiscal 2023. Net sales were $1.575 billion, up 1% from $1.559 billion the year before. Adjusted for an extra (53rd) week in fiscal 2023, sales in the just completed year were up 2.8%.

“Our results demonstrate that we are successfully executing our strategy, improving operational efficiencies and margins, growing profits faster than sales and expanding growth opportunities across channels and customers,” said Dan Fachner, J&J Snack Foods chairman, president and chief executive officer. “In addition to generating record annual sales and gross profit, we also set a new record for full-year adjusted EBTIDA. I am especially proud of our double-digit growth in adjusted EBITDA led by an 80-basis point improvement in gross margins to 30.9%, along with a 110-basis point improvement in adjusted EBITDA margins for the year.”

Also adjusted for the extra week, sales in fiscal 2024 rose 4.4% for the Retail segment, 2.4% for Food Service and 3% for Frozen Beverages. Operating income of the Retail Supermarket Segment in fiscal 2024 was $16,632,000, up 77% from $9,375,000 a year earlier. Food Service operating income was $49,454,000, down less than 1% from $49,778,000 in fiscal 2023. Frozen Beverages was the company’s most profitable business with operating income of $51,459,000, up 2.2%.

In the final quarter of fiscal 2024, net income was $29,641,000, or $1.52 per share, down 2.6% from $30,421,000, or $1.58. Fourth quarter sales of $426,756,000 were down 3.9% from $443,863,000. Adjusted for the extra week in the year-ago quarter, sales were up 3.9%.

Fachner said the growth in adjusted sales was impressive given “a challenging consumer environment across many of our key customer channels including amusement, convenience, restaurants, and retail.”

“These softer consumer trends, together with fewer sales days, had a marked impact on sales of core products including soft pretzels, churros, frozen beverages, frozen novelties and Dippin’ Dots, negatively impacting gross margin mix, and creating production and supply chain inefficiencies as we balanced demand and inventory in our plants and distribution centers,” he said. “This led to a gross margin of 31.8%, a 110-basis point decline compared to a record fiscal 2023 fourth quarter gross margin of 32.9%.” 

In a Nov. 14 call with investment analysts, Fachner acknowledged softness in foodservice sales in the fourth quarter but said the weakness was “short term in nature” and not expected to carry into 2025. Baked foods sales at foodservice were strong in fiscal 2024, driven by growth of cookie sales to existing and new customers, he added.

“Our bakery team has a well-thought-out plan to continue driving growth in 2025 that includes expanded production capacity, new products and incremental contract manufacturing opportunities,” he said.

Soft pretzels sales to foodservice customers were weak during the year, including in convenience, theaters, restaurant and amusement channels.

“This was pronounced throughout the entire market,” he said. “However, we continue to grow our market share within the industry. We remain well-positioned for growth as consumer trends improve in these key channels. Recently, we gained incremental placements of Bavarian pretzel bites across all sectors of the food service industry. We will continue to drive incremental opportunities through new innovations like Brauhaus pretzels, and Bavarian pretzel sticks and bites along with the expectations for improving channel performance of our core soft pretzel business.”

Fachner highlighted the strength of J&J’s handheld business at retail in fiscal 2024, with sales up 58% for the year.

“This is a strong business for us, led by growth and incremental placements with a major mass merchant,” he said.

Fachner said the company anticipates growth in fiscal 2025 in the company’s core products and expects successful new product launches and client partnerships. As an example, he said J&J Snacks is broadening its penetration into theaters with its Dippin’ Dots frozen desserts.