Private label growth drives earnings at Lance, Inc.

by Eric Schroeder
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CHARLOTTE, N.C. — Boosted by improved private label sales during the period, snack foods maker Lance, Inc. was able to reverse course from a year ago, posting net income of $6,210,000 in the first quarter ended March 31, equal to 20c per share on the common stock. This compared with a loss of $765,000 in the first quarter of fiscal 2006.

Net sales and other operating revenue of $182,426,000 compared with $180,745,000 in last year’s first quarter.

Lance said its private label business grew 5%, while its branded business fell 1% as the company worked to eliminate unprofitable customers and product lines.

"Our profit margins widened significantly during the quarter compared to the first quarter of 2006, reflecting a more profitable mix of revenues and more efficient operations driven by the integration of the Tom’s business, improvements in our supply chain and increased efficiencies in our D.S.D. operation," said David V. Singer, president and chief executive officer. "It should also be noted that revisions to our strategy around key marketing initiatives resulted in a delay in our first-quarter media spending. This delay in spending resulted in a benefit of approximately 3c in diluted earnings per share for the first quarter compared to our original plan; however, we anticipate spending in line with our original plan for the full year."

Mr. Singer added the company’s near-term outlook remains tempered by the increased cost of grain-based commodities, particularly cooking oils and flour.

"As we move forward through the remainder of the year, we will continue to execute on our key initiatives and look for ways to mitigate the rising cost of commodities," he said.

Lance revised its full-year 2007 projection for earnings per share to a range of 84c to 90c from 80c to 88c. The company confirmed its previous net sales estimate of $750 million to $775 million.

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