Packaged foods company B&G Foods (NYSE:BGS) missed Wall Street’s revenue expectations in Q1 CY2025, with sales falling 10.5% year on year to $425.4 million. Its non-GAAP profit of $0.04 per share was 74.2% below analysts’ consensus estimates.
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B&G Foods (BGS) Q1 CY2025 Highlights:
- Revenue: $425.4 million vs analyst estimates of $456.5 million (10.5% year-on-year decline, 6.8% miss)
- Adjusted EPS: $0.04 vs analyst expectations of $0.16 (74.2% miss)
- Adjusted EBITDA: $59.14 million vs analyst estimates of $70.48 million (13.9% margin, 16.1% miss)
- Operating Margin: 8.4%, up from -3.3% in the same quarter last year
- Market Capitalization: $363.9 million
StockStory’s Take
B&G Foods’ first quarter performance was shaped by persistent headwinds in the packaged foods sector and significant inventory adjustments by retailers. CEO Casey Keller discussed how net sales declined, especially in January due to retailers operating with lower inventory levels and clearing out fall merchandising stock more quickly than usual. The company also saw a marked impact from increased promotional investment in its Green Giant U.S. business and higher seasonal production costs for core vegetables, including corn and peas. Keller noted, “Our consumption was approximately minus 6% in the quarter one period. We expect the trends will improve in the back half as we lap negative comps from the middle of last year.”
Looking ahead, B&G Foods’ forward guidance reflects expectations for gradual stabilization in consumer demand and ongoing cost-saving initiatives. Management is implementing a portfolio reshaping strategy, focusing on divesting non-core assets and reducing operating expenses. CFO Bruce Wacha explained, “We have implemented efforts to reduce operating and overhead costs in the third and fourth quarters, which we expect to deliver $10 million in projected savings for this year.” Keller added that targeted productivity improvements and a more focused brand lineup are intended to support margin recovery and set the stage for future M&A in core business lines such as spices, Mexican meal preparation, and baking staples. However, both executives highlighted ongoing uncertainty related to consumer behavior and evolving trade and tariff negotiations.
Key Insights from Management’s Remarks
Management attributed the quarter’s results to a combination of retailer inventory destocking, timing shifts in holiday merchandising, and targeted promotional investments in core brands.
- Retailer inventory reduction: B&G Foods experienced a sharp decline in January sales as major retail partners reduced their inventory levels, leading to approximately $15 million in lost net sales during the quarter. Management described this as a mostly permanent shift, with retailers aiming for greater operational efficiency.
- Promotional investment in Green Giant: The company increased short-term promotional spending on the Green Giant frozen business to remain competitive amid aggressive category pricing. This move temporarily reduced margins but helped stabilize volumes. Management expects to revert to more typical promotional levels later in the year.
- Easter timing impact: The later occurrence of Easter in 2025 shifted significant merchandising of Green Giant and Crisco into April, reducing Q1 shipments by an estimated $8 million. This timing adjustment is expected to benefit Q2 sales.
- Input cost and crop pressures: Elevated costs for vegetables such as corn and peas, due to crop issues, further pressured margins in the Frozen & Vegetables business. While most raw material costs remained stable, certain categories like black pepper and garlic saw persistent inflation.
- Portfolio reshaping underway: Management reiterated plans to divest the Frozen & Vegetables business and other non-core units, aiming for a more focused portfolio centered on spices, Mexican meal preparation, and baking staples. Proceeds from any divestitures are targeted for debt reduction and a streamlined cost structure.
Drivers of Future Performance
Management expects gradual improvement in net sales and margins, driven by cost reductions, portfolio adjustments, and a more favorable comparison period in the second half of the year.
- Cost reduction initiatives: The company has launched a plan to achieve $10 million in cost savings during the remainder of the year, with a projected annual run rate of $15 million to $20 million. This includes SG&A cuts, improved productivity, and more selective promotional spending.
- Portfolio focus and divestitures: B&G Foods is prioritizing the sale of its Frozen & Vegetables business and evaluating additional non-core asset divestitures. Management believes a sharper focus on shelf-stable categories will improve margin stability and cash flow, supporting future M&A in core areas.
- External uncertainty and tariffs: The outlook remains subject to risks from ongoing trade and tariff negotiations, particularly for imported ingredients like spices. Management cautioned that the evolving political environment could impact input costs and overall profitability, especially in the spices segment, which sources from Asia.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will be closely watching (1) whether consumption trends continue to stabilize or improve as the company laps prior-year declines, (2) the pace and execution of portfolio divestitures and associated debt reduction, and (3) the effectiveness of cost reduction initiatives in supporting margin recovery. Additionally, the impact of trade policy developments and input cost volatility will be important markers for B&G Foods’ execution against its strategic objectives.
B&G Foods currently trades at a forward P/E ratio of 6.5×. In the wake of earnings, is it a buy or sell? The answer lies in our full research report (it’s free).
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