“Consumer behavior has changed rapidly in recent years and will continue to do so,” prompting JM Smucker to reshape its portfolio and restructure its corporate organization “to better support our business”,CEO Mark Smucker told analysts during the company’s third-quarter earnings call on Feb. 25.
“We really want to create a leaner, flatter organization, making sure we align ownership accountability, incentives, etc. with the financials, and we believe that will make us more agile,”he said.
But it also means “there are decisions that have a negative impact on our employees”,which are “very difficult”and that the company takes “extremely serious” Smucker said.
“From time to time, there are times when we need to ensure the long-term health of our business, and this is one of those times,”he explained. “We have a very strong continuous improvement mentality, and that’s a factor in that process.”
Without providing additional details on how many employees will be laid off or where these roles will come from at the company, Smucker assured analysts that the company was “To ensure that we treat our employees with the utmost respect, for those who leave the organization.
Currently, the company employs approximately 7,000 people in 30 production centers and sales offices in the United States and Canada.
Losses follow divestitures and plan to discontinue SKUs
The pending losses will come after the company announced in December that it would restructure as part of a broader effort to generate $50 million in annual savings in each of the next three years.
The news also comes after JM Smucker spun off its Crisco shortenings and oils business for $550 million last year and sold its Natural Balance pet food to Nexus Capital Management for $50 million in December.
“We have made great progress in revamping our portfolio. …These divestitures underscore our commitment to focus more on the brands and categories that present the greatest opportunities for long-term growth,”he explained.
He added that the company is not finished yet and may divest or remove additional lines and SKUs in the future.
“As we move forward, we will continue to evaluate all elements of the portfolio and make changes as necessary to ensure our portfolio is positioned for growth,”he said.
During a presentation to the Consumer Analyst Group in New York last week, Smucker said the company plans to cut an additional 30% of SKUs in its out-of-home business, which has been hit hard by the pandemic.
At the time, he reassured analysts that the move would have minimal impact on the company’s finances, noting that such products only accounted for 3% of the company’s net sales and that he expected that customers would switch to other offerings in the company’s portfolio. He did not discuss the impact on employees or corporate structure.
Retailers continue to simplify their assortment
Smucker added that the company’s confidence in this approach “is further supported by external factors, including retailers’ desire to simplify the assortment,”which started as a way to ease the strain on supply chains and keep shelves stocked during the early days of the pandemic, but which “we see…as a continuing trend.”
He explained that retailers’ decisions to reduce assortment tend to benefit large consumer brands, as they are more efficient on the shelf and, as fewer options are available, sales and market share are concentrated. on the remaining marks.
Smucker added: “Coffee and peanut butter would be two of the biggest benefits we get from it, and that means not only do we stay on the shelves, but in many cases we get more shelf space. And so, we see this as a continuing trend for the foreseeable future. »