ICYMI: 3 Takeaways From Last Week’s Earnings Calls

by Meagan McGinnes

What do a dairy brand, a protein giant, an industrial snack maker and a natural grocer all have in common? More than one might think.

Dean Foods, Tyson Inc., Snyder’s Lance Inc. and Natural Grocers all held quarterly earnings calls last week. Though the companies span categories, their leaders’ sentiments were surprisingly similar in the way they set up their roadmaps for 2017. Here are three takeaways from last week’s earnings calls.

 1. Brands are explaining the motivations behind their recent acquisitions.

During earnings calls, both Dean Foods and Tyson talked about recent acquisitions and how those new companies will fit into the framework of their current businesses.

Last week, Dean Foods acquired a minority stake in Good Karma Foods, which makes flax-based milk and yogurt. It’s currently the only plant-based product under the company’s umbrella. In 2016, the company also acquired ice cream brand Friendly’s and established a joint venture with Organic Valley to distribute and vary the brand’s dairy offerings. “The joint venture with Organic Valley and the investment in Good Karma are great examples of the many ways we can diversify our portfolio outside the conventional fluid milk,” Ralph Scozzafava, Dean Foods’ chief executive, said during the call.

Tyson talked about its purchase of ready-to-eat food company AdvancePierre for $4.2 billion. On the call, CEO Thomas Hayes said he hopes last month’s portfolio addition will help Tyson fuel growth to its prepared foods portfolio.

“AdvancePierre brings strong branded presence in the foodservice channel, in addition to capabilities that will enhance our innovation pipeline in retail packaged brands and our ability to drive profitable growth at the store perimeter,” he said. “It’s clear to us that the perimeter of the store, convenience channel, being in proteins was something we wanted to continue to sharpen and play at a higher level. So for us, that acquisition certainly plays in all those spaces.”

 2. Both brands and retailers are cutting their losses.

While some earning calls focused on exciting additions, others focused on cuts. Snyder’s-Lance and Natural Grocers both announced plans to scale back, the former through simplifying its portfolio and the latter by slowing store expansion plans.

Brian Driscoll, Snyder’s-Lance’s interim chief executive officer, said on the earnings call that the company plans to undergo a broad review of its 2,000 SKUs in order to eventually divest some of its non-core brands. The company hopes the future eliminations will boost sales and make the company more alluring for shareholders.

“We believe that a substantial reduction in unproductive SKUs will have a liberating effect on our DSD network, resulting in improved productivity and selling effectiveness,” Driscoll said. “You’ll have them spending more time on the products that drive better profitability, that have better productivity in store, and will actually enable them to get in and out of stores quickly enhancing their coverage. So, I think that the liberating effect this can have is no small matter.”

Following disappointing Q2 results, Colorado-based Natural Grocers will build fewer stores this year than initially planned, CEO Kemper Isley said in a conference call Thursday. Natural Grocers is now expected to open between 15 and 17 stores in 2017– at least three fewer stores than previously stated. “We will continue to be flexible with our unit growth plans to ensure we self-fund unit growth, although we continue to see opportunities for measured, new unit growth,” Isley said on the call.

 3. Portfolio expansions are better reflecting core values.

Tyson is leaning out its portfolio to make room for new growth. The company announced last month that it’s looking to sell non-meat brands Sara Lee frozen bakery, Kettle frozen foods and Van’s breakfast products to focus on pumping up its protein-packed portfolio. The company is also looking to raise profits by focusing on value-added items including heat-and-serve meals. Playing to health-conscious trends, Tyson has also committed to phasing out antibiotics from branded chicken products.

Similarly, Dean Foods’ focus has always been on dairy, but the brand is looking to expand its offerings beyond liquid milk. They’re doing so with their recent partnership with Organic Valley, and also through their own product innovation. Scozzafava said he’s hopeful about Dean Foods’ commercial and cost productivity initiatives, including its DairyPure clean label sour cream that launched in March. “We believe our new product innovation, strategic partnerships, and focus on eliminating waste in our supply chain are key enablers to deliver sustainable long-term growth and financial results,” Scozzafava said.