Smucker's $5B Hostess Deal Hasn't Been Entirely Sweet

Snack-time optimism hasn't exactly paid off for JM Smucker. The Wall Street Journal's Jesse Newman reports that the company's $5 billion purchase of Hostess—the maker of Twinkies, Ding Dongs, and Donettes—has led to slipping sales, falling profits, nearly $3 billion in write-downs, and a 14% stock drop since the 2023 deal was unveiled. Some of the drag is industry-wide: Americans are cutting back on discretionary snacks and GLP-1s are having an impact, though Smucker says not a material one. Newman details some of the bigger drags, among them how Hostess' short-shelf-life (think 65 days) cakes collided with Smucker's bread-and-butter products, which can last at least a year.

That meant different and more nimble production and shipping schedules. That about 40% of Hostess sales happen in convenience stores proved tricky as well, though Newman notes that has led to increased Uncrustables' sales in those locations. Activist investor Elliott now has two board seats as Smucker closes plants, trims product lines, refreshes branding, and touts early signs of stabilization. Indeed, June marked Smucker's first year-over-year bump in profits for its sweet baked snacks division. Read the full article here.