CHARLOTTE, N.C. -- Snack maker Snyder’s-Lance will drop hundreds of SKUs as part of a plan aimed at improving operating profit between now and 2020.
Brian J. Driscoll, president and CEO, said in an Aug. 8 earnings call that the company believes the move will help boost profit by about $175 million. It is part of a six-pronged initiative that includes reducing direct spending and streamlining manufacturing and distribution networks.
The company has identified nearly 750 of its roughly 2,000 branded SKUs that can be eliminated with a “minimal impact to revenue and a positive effect on operation income,” Driscoll said.
"As we remove low profitability, low velocity SKUs from the shelf, we can redeploy the trade dollars that are going against those SKUs into the higher velocity, higher-margin SKUs," said Alexander Pease, executive vice president and CFO, "which basically improve the economic picture both for the retailer as well as for us."
It will also create more space for the company’s core brands at retail, Driscoll said.
“So it's not necessarily in every instance adding new SKUs on core, but expanding core into the space vacated by some of the SKUs that we're eliminating,” he said.
Driscoll said the company’s goal is to “outpace the categories we compete in.”
“However, considering the impact from our SKU rationalization and trade effectiveness initiatives, we do anticipate growing modestly below category levels in the early stages of these initiatives,” he said.
Snyder’s-Lance’s net revenue for second-quarter 2017 was $579.6 million, an increase of 3.3% compared to second-quarter 2016. The company’s core brands accounted for the bulk of that, bringing in $401.7 million in net revenue, a 4.7% increase compared to second-quarter 2016. The increase was led by brands Late July, Snack Factory, Pretzel Crisps, Lance, Snyder’s of Hanover, Cape Cod, Pop Secret and Kettle Brand, offset by a decline in Kettle Chips.
The latest news continues the Charlotte, N.C.-based company’s transformation that began July 25 when it announced plans to close a chips plant in Perry, Fla., by the end of September. The company will also cut 250 redundant positions from its global workforce as it seeks efficiencies in manufacturing, supply chain and direct spending.
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