WESTERVILLE, OHIO — Another quarter, another stand-out performance from Chick-fil-A sauces for Lancaster Colony Corp.
The Westerville-based company said Chick-fil-A sauces accounted for more than 14 percentage points of Retail sales growth in the fourth quarter of fiscal 2021, up from 8 percentage points in the third quarter, boosted in large part to the rollout of the sauces into the retail channel reaching national distribution near the end of April. Total US sales for the sauces jumped to $38.1 million in the fourth quarter, up from around $15 million in the third quarter.
While still early in the national rollout of the sauces, David A. Ciesinski, president and chief executive officer, said repeat purchases have been “extremely strong.”
“If you look at the national launch, it’s only been in place since April,” Mr. Ciesinski said during an Aug. 26 conference call with analysts. “So we really don’t have on a national basis a strong repeat information. It’s just too early in the purchase cycle. But if we look at areas like the Southeast, what we’re seeing is repeats are in the high double digits, in the 40% to 50% range. And we’re seeing household penetrations that are also in the double digits.”
Mr. Ciesinski said there continues to be a lot of opportunity for Lancaster to grow the Chick-fil-A sauces platform, including introducing different package sizes.
“What we’re starting to think about now, for example, if you look at other really big products on the shelf, Hidden Valley Ranch, Sweet Baby Ray’s, Heinz Ketchup, all of those are selling in a considerably larger size or sizes than we are in our platform today,” he said. “So if you think about where do we go from here, it’s going to be increasing the number of facings on the shelf to drive holding power. It’s going to be upsizing so that we can get more into consumers’ pantries and into the refrigerators. And then also, there remains an opportunity on the table for us to work with Chick-fil-A to go into other variants. Right now, we’re constrained on capacity, so we can’t entertain those. But once Horse Cave (Ky.) comes online, it’s going to present us with the opportunity for that sort of next leg of growth for this great platform.”
Overall, net income at Lancaster in the year ended June 30 totaled $142.33 million, equal to $5.17 per share on the common stock, up 3.9% from $136.98 million, or $4.98 per share, in fiscal 2020. Net sales rose 9.9% to $1.47 billion from $1.33 billion in the same period a year ago.
In the fourth quarter, net income totaled $31.73 million, or $1.15 per share, up 4.4% from $30.39 million, or $1.10 per share, in the same period a year ago. Net sales were $385.57 million, up 20% from $320.85 million a year ago.
Operating income in the company’s Retail unit was up 17% in the full year to $188.4 million from $161.49 million but was down slightly in the fourth quarter to $43.85 million from $44.86 million. Net sales in the unit rose 16% in the full year to $828.96 million from $714.13 million and increased 11% in the fourth quarter to $214.31 million from $192.43 million.
Operating income in the company’s Foodservice unit totaled $89.05 million in full year, up 11% from $80.48 million in the same period a year ago. In the fourth quarter, operating income rose sharply as consumers made their way back to restaurants, rising 61% to $22.2 million from $13.82 million. Net sales in the unit rose 2.9% in the full year to $638.1 million from $620.26 million, while fourth-quarter sales increased 33% to $171.26 million from $128.43 million.