November 3, 2013

 
Hillshire Brands reports 1% net sales rise in Q1 2014 fiscal

For its first quarter of fiscal year 2014, the Hillshire Brands Company reported that its net sales increased 1% to US$984 million on-year with adjusted operating income of US$76 million, down 24.4% against prior year's 76.5% increase and a drop of 35.2% in operating income.

"I'm pleased to report a solid start to the year," said Sean Connolly, president and chief executive officer of The Hillshire Brands Company. "Although input cost inflation has been significantly higher than anticipated, we continue to make good progress with our brand-building efforts."

 
"As we've moved into the second quarter, we've begun to take additional pricing actions. While this will pressure volumes as consumers adapt to higher price points, we still expect sales trends to improve in the second half behind a robust innovation slate. We also still expect gross margins to improve in the second half, fuelled by both our pricing actions and our cost efficiency programmes. Accordingly, our full year guidance remains unchanged at this time."

Net sales of US$984 million were up 1% versus the prior year's first quarter, as positive pricing and mix in the food service/other segment more than offset a modest decline in retail sales. Adjusted operating income of US$76 million was down by 24.4% over the prior year, mainly driven by significantly higher input costs in the prior year. Reported operating income was US$55 million, down 35.2% from the prior year's first quarter.

Retail net sales showed a slight decline of 0.7% in the first quarter versus a strong prior year comparable. Favourable mix was more than offset by lower volumes and lower pricing, reflecting higher above-the-line marketing investment.

Operating segment income declined by 27.8% versus a 45.5% increase in last year's comparable quarter, primarily driven by higher input costs. MAP spend was lower than in the prior year's first quarter, which reflects a modest marketing mix shift to more trade spend and slotting.