Executive Summary
The J.M. Smucker Company reported QQ1 2026 results showing a revenue decline and a still-challenged profitability profile, with the top-line at $2.1133 billion and net income of -$43.9 million (EPS -$0.41). The quarter underscored several ongoing dynamics shaping Smucker’s near-term trajectory: (1) a continued pricing-led lift in the coffee portfolio that management now views as mid-20% pricing with a low-to-mid-teens negative volume impact, (2) persistent tariff headwinds that offset pricing benefits and compress margins, and (3) a strategic portfolio action plan including SKU rationalization in Sweet Baked Snacks and an Indianapolis bakery closure designed to yield $30 million in annual savings, with $10 million benefitting in Q4 and the remaining in FY2027. Management reiterated an EPS midpoint of $9 for the full year, but highlighted that the net headwind from tariffs (~$0.50 per share) remains a timing and mix risk.
Key Performance Indicators
QoQ: -45.94% | YoY:-48.02%
QoQ: 107.68% | YoY:-88.77%
QoQ: 93.37% | YoY:-117.91%
QoQ: 93.41% | YoY:-117.75%
Key Insights
Revenue: $2.1133B (YoY -4.2%, QoQ -3.3%). Gross profit: $474.7M (margin 22.46%). Operating income: $45.6M (margin ~2.16%). EBITDA: $175.8M. Net income: -$43.9M; EPS: -$0.41. Free cash flow: -$94.9M. Cash from operations: -$10.6M; cash at period-end: $39.3M. Total assets: $17.7419B; total liabilities: $11.816B; total debt: $8.0806B; net debt: $8.0413B. YoY revenue decline driven by volume softness in select segments and mix; profitability largely pressured by tariff costs and higher input costs i...
Financial Highlights
Revenue: $2.1133B (YoY -4.2%, QoQ -3.3%). Gross profit: $474.7M (margin 22.46%). Operating income: $45.6M (margin ~2.16%). EBITDA: $175.8M. Net income: -$43.9M; EPS: -$0.41. Free cash flow: -$94.9M. Cash from operations: -$10.6M; cash at period-end: $39.3M. Total assets: $17.7419B; total liabilities: $11.816B; total debt: $8.0806B; net debt: $8.0413B. YoY revenue decline driven by volume softness in select segments and mix; profitability largely pressured by tariff costs and higher input costs in coffee. Management maintains a cautious but constructive path to 3x leverage by FY27 through deleveraging and ongoing cost actions.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
2.11B |
-4.19% |
-3.33% |
| Gross Profit |
474.70M |
-48.02% |
-45.94% |
| Operating Income |
45.60M |
-88.77% |
107.68% |
| Net Income |
-43.90M |
-117.91% |
93.37% |
| EPS |
-0.41 |
-117.75% |
93.41% |
Management Commentary
- Pricing and tariffs: Management now expects coffee pricing to run in the mid-20s percent, with volume declines in the low-to-mid teens, implying a low-to-mid-teens net growth in the segment YoY. They view a sequence of pricing actions across the year (May, August, early winter) and note tariff-related headwinds are offsetting some elasticity gains. (Quote from Tucker Marshall)
- Elasticity and top-line cadence: The full-year elasticity is modeled around 0.5, with stronger early pricing delivering additional benefits (approx. $100M coffee top-line impact) but tariff headwinds capping upside. (Quote from Tucker Marshall)
- Brand momentum and portfolio actions: Milk Bone is expected to return to growth in the second half, supported by advertising, innovation (PB Bytes), and seasonal mix; SKU rationalization in Sweet Baked Snacks will begin to flow through with $10M of a $30M benefit in Q4 and $20M in FY2027, while Donette and convenience-channel initiatives show early green shoots. (Quotes from Mark Smucker)
- Operational efficiency: The Indianapolis bakery closure supports $30M annual savings, improving profitability over time; volume was not meaningfully impacted by SKU rationalization in Q1. (Quote from Mark Smucker)
- GLP-1 drug impact and policy: Smucker indicated no meaningful near-term impact from GLP-1 drugs on its categories, and continues to monitor tariffs and potential exemptions with industry groups. (Quotes from Mark Smucker)
The current outlook for pricing in the coffee segment is going to be in the mid-20s now. That would include additional pricing actions in the early winter associated with the increased tariff rates that we're experiencing on green coffee. And then furthermore, we would likely see an impact of volume in the low to mid-teens. Therefore, having kind of a low to mid-teens overall growth for the segment year over year.
— Tucker Marshall
Milk Bone returning to growth. In the back half of the year we have strong comps, ongoing brand support, and we will tactically sharpen price points and use promotions where needed to drive growth across the brand. We still have high confidence in the brand and will continue to support it through the fiscal year.
— Mark Smucker
Forward Guidance
Outlook and key drivers for the remainder of FY2026: - EPS guidance remains anchored at a $9 midpoint for the full year, with a cadence of margin stabilization anticipated in the second half as coffee pricing actions pass through and tariff headwinds abate or stabilize. - Coffee elasticity remains a meaningful driver: mid-20s pricing, with a mid-teens volume drag, yielding an overall mid-teens top-line growth contribution in the segment for the year. The company also expects further pricing actions in early winter. - Balance sheet and cash flow: Smucker raised its FY2026 free cash flow guidance by $100 million (to $975 million) on a continuing basis, aided by the TCJA-related benefits; management targets deleveraging to ~3x net debt/EBITDA by FY2027. - Portfolio actions (Sweet Baked Snacks, Hostess, Uncrustables, Milk Bone): incremental cost savings from SKU rationalization ($30 million annualized) begin in Q4 and persist into FY2027, with profitability expected to improve sequentially as the actions take effect. - Risks and watch items: tariff policy trajectory and potential exemptions, green coffee input costs, consumer discretionary demand, and potential GLP-1-related demand shifts. Investors should monitor tariff relief developments, coffee hedging timing, and the pace of deleveraging.