DALLAS — Solid execution, especially in the area of the company’s enterprise-wide cost productivity plan, helped Dean Foods Co. narrow its loss in the first quarter of fiscal 2018. The Dallas-based company sustained a loss of $265,000 in the first quarter ended March 31, which compared with a loss of $9,759,000 in the same period a year ago.
News of the improved results led the company’s share price sharply higher on May 8, climbing more than 17% to as high as $9.82 in mid-day trading before closing at $9.75 on the New York Stock Exchange.
“We continue to drive our commercial agenda on several fronts,” Ralph P. Scozzafava, chief executive officer, said during a May 8 conference call with analysts. “First, building strong and resilient brands in the categories we compete is a primary focus for our selling and marketing team. Despite continued retail investment in private label white milk and a growing price gap, DairyPure continues to be the brand leader and deliver flat year-over-year dollar share in the white milk category at retail. In 2018, we’re investing in DairyPure at higher levels than last year. And as we support our product innovation and new marketing campaign, we’re also expanding our reach through increased digital presence in addition to airing new TV creative. We’re also diversifying into adjacent categories with our new DairyPure mix-ins cottage cheese, which began shipping in early Q2 and thus far is tracking to our expectations.
“The Organic Valley Fresh joint venture continues to progress with some additional customer wins and ACV growth. And of course, we’re actively pursuing smart volume to support our win in private label strategy, where we prudently balance volume and price with a lens toward better profitability across our network. This is a large and important business for us, and we’re committed to winning here as well.”
Net sales at Dean Foods in the first quarter totaled $1,980,507,000, down 1% from $1,995,686,000 in the same period a year ago.
During the question and answers portion of the conference call Mr. Scozzafava was asked to elaborate on Dean Foods’ branded milk business, and what steps the company may be taking to pump up sales.
“First, I would tell you on the brand side we have solid velocities on our brands, DairyPure, TruMoo,” Mr. Scozzafava explained. “And one of the measures of a brand and how you’re building equity is how resilient that brand can be in the face of what I would call very aggressive private label activity at a heightened level than we’ve seen in many years. Now to the degree that’s sustainable, I would argue it’s not.
“And at some point, that’ll subside, but even in the face of all of that, we’ve got basically flat dollar volume, dollar share. And our velocities are performing very well and in fact strong and outperforming the category in the food channel, where we do the bulk of our business. So I tell our folks our brands are going through the crucible right now in the marketplace and are quite resilient. … we’ll continue to drive our brand building with increased support this year, more diversification beyond fluid milk but, of course, supporting the core fluid milk business.”