National Brands Create Loss for Snyder's-Lance

May 17, 2011
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Charlotte, N.C.-based snack producer Snyder's-Lance, Inc. reported less than 1 percent growth in its private label category in the first quarter of its current fiscal quarter compared with the same period a year ago. The limited growth is a result of pricing resistance and more aggressive promotions from national brands, which executives feel can be offset by introducing new products to the category.
The continued languishing of the company's private label brands has caused analysts to doubt whether private label has a future in the Snyder's-Lance portfolio. Snyder's-Lance executives, on the other hand, argue that the private label category “provides a buffer from time to time in terms of sales and helps cover costs,” and is thus an integral part of the company's portfolio.
“There has been promotional pressure from different categories, specifically the cookie category, for quite some time,” Dave Singer, CEO of Snyder's-Lance, Inc., said in a prepared statement. Consumer resistance to price increases in legacy products also poses as a challenge to further sales growth within the category.
“Our priority is to protect private brand margins, make trade offs as necessary and make trade offs on volume if it comes to that,” says Carl E. Lee, president and COO. The company also plans to address consumer resistance and pricing challenges by continuing innovations and introducing new products into the category. Some of these innovations, says Singer, are already in place.
Net earnings for the first quarter of fiscal 2011 elevated to $388 million from $222 million in the first quarter of the prior year. The 75 percent increase in revenues, executives say, was driven by the merger with Snyder's.
Sales for the quarter were also up 3.7 percent from the prior year. Private label goods accounted for 20 percent of those sales, bringing in a total of $300 million between fiscal 2010 and fiscal 2011.

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