ORRVILLE, OHIO — The J.M. Smucker Co.’s struggles to improve the performance of its Sweet Baked Snacks business and Hostess Brands became clearer on Feb. 27 when the company took non-cash impairment charges against the business of approximately $1 billion.

“We recognized a $794 million impairment charge related to the goodwill of the Sweet Baked Snacks reporting unit, and a $208 million impairment charge related to the Hostess brand indefinite-lived trademark,” said Tucker Marshall, chief financial officer, in prepared remarks released Feb. 27. “These impairment charges are driven by the recent underperformance of the Sweet Baked Snacks segment.”

During a conference call with securities analysts on Feb. 27, one analyst noted the impairment charges are nearly 20% of the purchase price Smucker paid for Hostess.

“This (the impairment charges) reflects the slower-than-anticipated recovery of the sweet baked goods category and our execution from a distribution, merchandising, and competitive standpoint,” Marshall said. “Going forward, we are focused on our five pillars to stabilize and return the Hostess brand to growth.”

Sweet Baked Snacks sales decreased 8% during the third quarter ended Jan. 31 to $279 million from $300 million during the same period of the previous year. Segment profit decreased 19% to $55 million from $68 million.

“Volume/mix decreased net sales by 5 percentage points, reflecting decreases for snack cakes and private label products, partially offset by an increase for donuts,” Marshall said. “Net price realization decreased net sales by 2 percentage points, reflecting lower net pricing across the portfolio.”

In response to a securities analysts’ question, Mark Smucker, chairman, president and chief executive officer of J.M. Smucker, said the Sweet Baked Snacks unit is temporarily down due to a more selective consumer and executional missteps related to distribution.

“ … Although we haven’t given time frames and so forth in terms of returning to growth, we still do feel very bullish about the brand,” he said. “And, obviously, part of that was the portfolio evolution of getting more focused on Hostess, divesting the value brand as well as Voortman. So, still feel very good about it.”

The impairment charges cratered the company’s third-quarter earnings. J.M. Smucker recorded a loss of $662 million, which compared unfavorably to net income of $120 million, equal to $1.14 per share on the common stock, during the same period of the previous year.

J.M. Smucker sales fell 2% during the quarter to $2.19 billion from $2.23 billion the year before.

In US Retail Coffee, the company’s largest business unit, sales ticked up 2% to $741 million from $728 million the year before. Segment profit was flat at $209 million compared with $208 million the year before.

Given the volatility of the green coffee market, Smucker said he was pleased with the business unit’s performance.

“I think it’s important to just remember that despite the fact that we’re at these record high coffee costs, we’ve been pleased with the performance of the coffee business in total and the consumer response to obviously, pricing, but of course, our support of the brand, our merchandising, our marketing as well and just reminding ourselves that at-home coffee is still very healthy in terms of consumption and also being by far the most affordable way to consume coffee compared to all other channels or other formats,” he said.

Sales in the US Retail Frozen Handheld and Spreads unit rose to $445 million from $437 million.

“Volume/mix increased net sales by 2 percentage points, primarily driven by an increase for Uncrustables sandwiches, partially offset by decreases for fruit spreads and peanut butter,” Marshall said. “Net price realization was neutral to net sales, reflecting higher trade spend for peanut butter, mostly offset by higher net pricing for toppings and syrups.”

Segment profit fell 5% to $99 million from $104 million primarily due to higher costs, according to the company.

In US Retail Pet Foods, sales fell 9% to $423 million from $466 million. Segment profit ticked up to $117 million from $110 million.

The performance of the company’s International and Away From Home business was flat with sales of $299 million 2024 and 2025. Segment profit rose to $62 million from $50 million. Pricing contributed to the 22% increase in segment profit, the company said.