Post Holdings is impacted by consumers trading up.
ST. LOUIS: The value consumer: what has happened to them? Post Holdings, Inc. reiterated TreeHouse Foods, Inc.’s statement from the previous day that value consumers switching from private label to branded products was negatively affecting the company’s quarterly performance, adding that the company’s value brands are also being impacted.
President and CEO of Post Holdings, Inc. Robert V. Vitale said, “I almost thought about stealing the chart that — the slide that TreeHouse had about the discretionary blip and the impact on the value segment because I thought that was fairly illustrative of what we are seeing,” during a conference call on August 6 to discuss third-quarter results. “I believe there are a few channel problems. Although they seem fleeting, I believe there are some customer difficulties. And even though I detest using the word “feel,” it’s the best I have at the moment.
Mr. Vitale blamed the recent rise in discretionary income from government stimulus programs, which created a “trade-up effect,” for the deterioration in the value product market. He continued by saying that certain odd customer behavior has “somewhat clouded” the cereal category’s future.
“I think at the category level, you can get maybe some false conclusions if you look at the data going back to 2019 and compare it to 2021 because, if you strip out value, which is mostly us, the branded portfolios, including ours, have done very well,” the man stated. Over that time, we have significantly expanded our Post portfolio and increased our share.
Mr. Vitale reiterated that he believes the current state of affairs is temporary and that, “given that it is temporary,We are quite pleased with the category’s gradual volume increase, modest profit growth, and long-term viability. But what is actually going on (with) that value shopper is the one area we are concentrating on.Sales of Post Consumer Brands’ business unit decreased 11% to $469 million throughout the course of the quarter.
Another difficulty Post Holdings faced was in its Refrigerated Retail division, where capacity was limited by labor and supply chain problems. It’s “our biggest challenge this quarter,” according to Mr. Vitale, who also predicted that it will persist into the fourth quarter.
“Manufacturing constraints have reduced internal capacity, primarily due to labor availability,” he stated. “Although we now work with more external supply chain partners, their costs are higher and they also have similar labor challenges.”
The combined manufacturing network faced additional strain in Q4 due to the Christmas season since it was unable to meet all customer demand in Q3.
Mr. Vitale gave Post Holdings’ 22 precooked lines across its production footprint as an example of the difficulty, pointing out that the company can only staff 17. Because of these inefficiencies, the corporation has had to distribute demand and incur greater costs.
Retail sales of refrigerated goods decreased by 12% to $221 million during the quarter.
“To put it briefly, we are managing a difficult environment quite effectively,” Mr. Vitale stated. “Our supply chains have been strained by the pandemic and the public policy responses, which have led to some incredibly odd outcomes regarding consumer behavior, labor availability, commodity volatility, and other issues.”We think a lot of these difficulties
The combined manufacturing network faced additional strain in Q4 due to the Christmas season since it was unable to meet all customer demand in Q3.
Mr. Vitale gave Post Holdings’ 22 precooked lines across its production footprint as an example of the difficulty, pointing out that the company can only staff 17. Because of these inefficiencies, the corporation has had to distribute demand and incur greater costs.Retail sales of refrigerated goods decreased by 12% to $221 million during the quarter.
“To put it briefly, we are managing a difficult environment quite effectively,” Mr. Vitale stated. “Our supply chains have been strained by the pandemic and the public policy responses, which have led to some incredibly odd outcomes regarding consumer behavior, labor availability, commodity volatility, and other issues.”We think a lot of these difficulties
.. The company lost money in comparison to the same period in fiscal 2020, when it made $36 million, or 53¢ per share of common stock.Sales increased 19% in the quarter to $1.59 billion.
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The management offered several explanations for the loss, including exchange costs, a charge related to the UK tax reform, losses from the equity method, and net earnings attributable to noncontrolling interest.Post Holdings now anticipates earnings for fiscal 2021 to fall between $590 million and $610 million, having reduced the upper end of its earnings projection from $620 million to $610 million.