Pinnacle Foods posted sales of $758.8 million in the third quarter, reflecting a 19.3% increase compared with the same year-ago period. The increase is, in large part, due to contributions from Boulder Brands. The company reported that Boulder Brands recorded sales of $121 million in Q3.
Pinnacle Foods acquired Boulder Brands in January 2016, substantially expanding its health and wellness footprint. Boulder Brands – best known in gluten-free circles for its Udi’s and Glutino brands – also owns the Earth Balance, EVOL and Smart Balance brands.
Not only is Pinnacle benefiting from Boulder Brands’ sales contribution, it’s also realizing a gross margin bump associated with the high-margin organic, natural and gluten-free product categories. Pinnacle Foods recorded a 30.1% gross margin (as a percentage of sales) in Q3. This compares quite favorably to last year’s Q3 gross margin of 27.8% prior to the Boulder Brands acquisition.
Pinnacle Foods Increases Full-Year Guidance
Pinnacle also increased its full-year guidance based on the continued strength of Boulder Brands. Growth assumptions include full-year sales in the $460-$480 million range coming from Boulder Brands.
In related news, Pinnacle Foods also announced the appointment of Michael S. Levitt to a newly created role as Senior Vice President of Corporate Development. Among Levitt’s duties, he will be responsible for assessing merger and acquisition opportunities that support the company’s long-term strategic plans. In not so many words, this means he’s likely charged with finding the next Boulder Brands.
GF Retail Take
- A growing roster of big consumer packaged goods manufacturers will explore, experiment and enter the natural/organic or gluten-free space, such as Pinnacle Foods did with its acquisition of Boulder Brands.
- Not only will these kinds of acquisitions better position CPGs for continued growth, but stronger gross margin performance as well.
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