J&J Snack Foods falls 1.3% on earnings miss amid margin expansion
Cost-cutting program delivers early benefits as company authorizes new $50M share repurchase
J&J Snack Foods shares declined 1.3% in early Tuesday trading after the snack food manufacturer reported fiscal first-quarter earnings that missed analyst expectations, though improved margins and a new share repurchase program signaled confidence in the company's turnaround strategy.
The Pennsauken, New Jersey-based company reported adjusted earnings per share of $0.33, falling short of the $0.36 consensus estimate among analysts. Revenue of $343.8 million also missed projections of approximately $366 million, representing a 5.2% decline from the prior year.
Despite the revenue shortfall, investors found encouragement in the company's improving profitability metrics. Gross margin expanded by 200 basis points to 27.9%, while adjusted EBITDA grew 7% year-over-year to $27 million. The margin improvement reflects the early impact of Project Apollo, the company's business transformation program focused on manufacturing consolidation and portfolio rationalization.
"The first quarter results reflect disciplined execution of key priorities to drive profitability," said Dan Fachner, chairman, president and chief executive officer. He highlighted the 200-basis-point gross margin expansion and 7% adjusted EBITDA growth, achieved despite a 5.2% sales decline and $1 million in product disposal expenses.
The company announced a new $50 million share repurchase authorization, effective for approximately two years. J&J Snack Foods completed a prior $50 million authorization by repurchasing $42 million worth of stock during the first quarter, signaling management's confidence in the company's valuation and long-term prospects.
Project Apollo remains central to the company's strategy. The initiative is on track to deliver $20 million in annualized savings during fiscal 2026, with an additional $5 million to $7 million expected from Phase 2 in fiscal 2027. The program includes strategic exits from lower-margin products, particularly in the bakery business, and manufacturing optimization efforts.
Benchmark analysts maintained their Buy rating on J&J Snack Foods with a $130 price target, citing the progress of Project Apollo as a key driver. The consensus among analysts remains positive, with an average target price of $112.50—roughly 18% above current levels—reflecting optimism that cost-cutting initiatives will offset near-term sales pressure.
Segment performance showed divergent trends. The Food Service division, which accounts for the majority of revenue, declined 8.3% to $219.2 million, while Retail Supermarket sales increased 2.6% to $45.9 million. The Frozen Beverage segment remained essentially flat at $78.7 million. The pretzel business continued momentum from the second half of fiscal 2025, according to management commentary.
Looking ahead, the company plans to launch Dippin' Dots for retail distribution in the second quarter, alongside new "better-for-you" pretzel and frozen novelty products. These launches represent J&J Snack Foods' strategy to capture consumer demand for healthier snacking options, a key focus area for the industry.
The company did not provide explicit forward guidance, consistent with previous quarters. Management cited uncertainty around consumer spending patterns, price competition, and raw material availability as factors that could impact performance. The stock, which closed at $95.20 on Monday, has traded in a 52-week range of $79.99 to $140.24.
With a market capitalization of $1.84 billion and a relatively low beta of 0.34, J&J Snack Foods remains a defensive play in the consumer staples sector. The company's 3.35% dividend yield and ongoing share repurchase program provide additional support for shareholders amid the transition period.
Investors will be watching closely for evidence that Project Apollo's margin improvements can sustain momentum throughout the year, particularly as the company faces continued pressure in the Food Service channel and works to revitalize its product portfolio with healthier offerings.