PARSIPPANY, NJ — B&G Foods, Inc. is doing its part to keep the nation’s food supply chain strong, the company’s top executive said.
In a May 5 conference call with analysts to discuss first-quarter financials, Kenneth G. Romanzi, president and chief executive officer, said the company’s ability to serve customers has not to date been materially impacted.
“Our customer service rate for March was strong, fulfilling more than 95% of all orders for both the month and for the last two weeks when the demand surge peaked,” Mr. Romanzi said. “While that has declined with continued increased demand, our service rates have declined to just below 90% in April. We’re pleased we're doing our part to keep the nation's food supply chain strong.”
Mr. Romanzi said the last week of March was the strongest sales week in B&G company history with more than $65 million in net sales. Mr. Romanzi said several of B&G Foods’ brands doubled or nearly doubled their year-ago consumption for the entire month of March, including Green Giant and Le Sueur canned vegetables, Clabber Girl baking powder, B&M baked beans, Underwood, Victoria and McCann's.
“Contrary to some belief that consumers were only pantry loading for the long term, consumers have been consuming a large percentage of the increased volume, driving continued strong performance throughout the month of April with our net sales increasing more than $70 million, or more than 60% ahead of last year for the four weeks ending April 25,” he said.
Mr. Romanzi said B&G expects its foodservice sales will remain challenged as people continue to shelter in place. He said the company has experienced softness in its foodservice business, which represented approximately 13% of net sales in 2019. Some of the businesses mostly impacted by the decrease in foodservice sales include the company’s spices and seasoning business, B&G brand, Don Pepino and Maple Grove Farms.
In the third quarter ended March 28, B&G Foods had net income of $28.09 million, equal to 44¢ per share on the common stock, up 67% from $16.79 million, or 26¢ per share, in the same period a year ago.
Adjusted net income was $29.22 million, or 46¢ per share, up from $29.06 million, or 44¢. The most recent quarter included acquisition/divestiture-related and non-recurring expenses related to the Clabber Girl and Farmwise acquisitions, and severance and other expenses primarily relating to a 2019 workforce reduction and certain other cost savings initiatives. The most recent quarter also included a $2.3 million tax benefit associated with the US CARES Act.
Net sales in the latest quarter totaled $449.37 million, up 8.9% from $412.73 million a year ago.
Even as the company’s retail business is trending strong, Mr. Romanzi said B&G recognizes brand building and innovation will remain critical pieces to long-term success. He said certain innovation plans will be delayed somewhat due to retailers’ focus on getting existing products to the shelf first, but B&G intends to step up investment against its new products to ensure success.
B&G’s largest innovation will be in Green Giant frozen vegetables, where the company will continue the launch that began in the fall of 2019 with Green Giant Pizza with Cauliflower Crust, Green Giant Veggie Hash Browns, Green Giant Cauliflower Gnocchi, and Green Giant Cauliflower Breadsticks.
In addition, Mr. Romanzi said B&G is very excited about its recent Farmwise acquisition and expects it will add fuel to the Green Giant innovation pipeline as well as provide a brand name more appropriate for the natural channel.
“This fall, we plan to leverage this acquisition of Farmwise by introducing Green Giant Veggie Fries, in innovative new varieties, including zucchini garlic Parmesan, cauliflower ranch and bacon, and broccoli and cheese, along with a totally new product called Green Giant Veggie Rings, our cauliflower-based take on onion rings. These will come in varieties such as cauliflower french onion and cauliflower three-cheese and bacon. Regarding the Farmwise brand, we plan to relaunch the brand in the natural channel, plus a few current mainstream retail customers later this year as well.”
On the grocery side of the business, B&G will continue with its plans to roll out a shelf-stable version of Green Giant rice veggies, which Mr. Romanzi described as an alternative to traditional dry rice made from legumes like lentils, sweet peas and chickpeas. He said retailer acceptance of this innovation has been very good.
Beyond Green Giant, B&G’s Ortega brand will get a boost with the introduction of cauliflower taco shells and cauliflower tortillas as well as the line of street taco sauces.
“These new products have been very well received by our customers with many of them saying it's the first real innovation they've seen in the category in quite some time,” Mr. Romanzi said.
In addition to brand building and innovation, B&G intends to ramp up its investment in e-commerce, which Mr. Romanzi said accounts for less than 1% of the company’s business.
“Although it's really taken off this past quarter, growing more than 100% on Amazon alone, we know we need to catch up to many of our competitors in this space,” he said. “By the end of 2020, we plan to make significant progress in building our e-commerce capability by completing the foundational work needed on our digital imaging, content and product data, improving our product offerings with innovation and e-commerce friendly packaging and improved data compliance.
“We will combine this with a greater investment in internal resources, including marketing, sales and supply chain personnel, along with increased investments to build out our e-commerce shopper marketing program, including branded stores, banner ads, social media links, and search engine optimization amongst other activities.”