Lancaster Colony Corporation (NASDAQ:LANC) today reported results for the company’s first fiscal quarter ended September 30, 2016. Highlights for the quarter are as follows:
- Net sales decreased 0.9% to $291.4 million versus $294.1 million last year.
- In the retail channel, net sales increased 3% with Olive Garden® dressings, Marzetti® caramel dips, New York BRAND® Bakery frozen garlic bread products and Sister Schubert’s® frozen dinner rolls performing well. Higher coupon expenses and product placement costs served to limit retail sales growth. In the foodservice channel, net sales declined 5% as influenced by our targeted business rationalization efforts, deflationary pricing from lower egg costs and weakness in limited time offer promotional programs with national chain restaurants.
- Despite the slight decline in net sales, operating income increased over 21% to $50.8 million on lower commodity costs, particularly eggs, a more favorable sales mix and reduced freight costs partially offset by a higher level of investment in marketing and retail promotions. The change in corporate expenses for the current quarter largely reflects costs related to closed business operations.
- Net income was $33.4 million, or $1.22 per diluted share compared to $27.6 million or $1.01 per diluted share last year.
- The regular quarterly cash dividend was continued at the higher level of $.50 per share set in November 2015. The company’s balance sheet remained debt free on September 30, 2016 with $145.7 million in cash and equivalents.
Chairman and CEO John B. Gerlach, Jr. commented, “While our top line was challenged by the customer rationalization and deflationary pricing in the foodservice channel, we were encouraged by the improved contributions from our frozen bread businesses in the retail channel and pleased to report record high first quarter operating income. Although we have seen a heightened level of competition within the refrigerated dressing category in recent months, we remain very positive about this category and our leading market position. Looking
ahead, commodity costs are expected to remain favorable in the second quarter then turn flat for the back half of the fiscal year. On the innovation front, retailer acceptance of the recently introduced Bake & Break™ garlic bread loaf from New York Bakery has been trending favorably. We also launched a new Sister Schubert’s Shareable™ bread loaf and added a red wine balsamic flavor to our lineup of Olive Garden retail dressings.”
Conference Call on the Web
The company’s first quarter conference call is scheduled for this morning, October 27, at 10:00 a.m. ET. You may access a live webcast of the call via the link on the company’s Internet home page at www.lancastercolony.com. A replay of the webcast will also be made available on the company website.
About the Company
Lancaster Colony Corporation is a manufacturer and marketer of specialty food products for the retail and foodservice channels.