Increased advertising to support brand differentiation ate into second quarter profits at snack maker Snyder’s-Lance, but the company expects the investment to pay off during the second half of the year.
Snyder's-Lance, Inc. said sales increased 9.9% to $439 million from $399 million and profits, excluding non-recurring items, increased 12.6% to $16.9 million, or 24 cents a share, compared to $15 million, or 22 cents a share. Earnings per share were four cents below analysts’ consensus estimate.
Despite falling short of Wall Street’s outlook, president and CEO Carl E. Lee, Jr., said he was pleased with the company’s performance as it looks to build a stronger, premium and differentiated snack foods company.
"Growing our top line at 10% year over year through a combination of acquired and organic growth demonstrates our team is capable of winning on many fronts,” Lee said. “Our plan of emphasizing core brands, while expanding margins for our private brands and other products over time, is proving to be a solid path forward for creating shareholder value.”
Snyder’s-Lance increased investments in marketing and advertising during the second quarter to build brand awareness and drive sales in the second half of the year. During the quarter, the company stepped up advertising spending to launch a new television advertising campaign for Snyder's of Hanover pretzels and also increased social media promotional activities for the 100-year anniversary of the Lance brand.
“We continued to benefit from our acquisition of Snack Factory Pretzel Crisps which posted significant year over year revenue and market share gains,” Lee said. “Net revenue for our core branded products was up 22% for the second quarter, largely driven by acquired volume. In addition, all of these core brands posted market share gains for full year 2013.”
Looking ahead, Lee said the company expects solid sales momentum in the second half of 2013 as its core brand advertising, marketing and promotional efforts begin to influence retail sales.
“We firmly believe that our strategic plan remains solid and we have a number of product innovations and initiatives for the remainder of 2013 and beyond to build our brands and expand their distribution,” Lee said.
The Charlotte, NC.-based company manufactures and markets snack foods under brands such as Hanover, Lance, Cape Cod, Pretzel Crisps, Krunchers!, Tom's, Archway, Jays, Stella D'oro, Eatsmart, O-Ke-Doke, and Padrinos.