Having shed restaurants, Bob Evans sales jump
At last rid of the anchor that was its restaurant business, Bob Evans Farms is soaring.
The New Albany-based company pared its business to selling refrigerated side dishes and sausage, And thanks to whopping retail sales growth and a recent acquisition, it beat Wall Street’s expectations for its first-quarter earnings, reported Wednesday, despite high pork costs.
Sales were $109 million, up 27 percent compared with a year ago, and earnings per share rose from 23 cents per share a year ago to 35 cents per share.
Net income also climbed from $4.5 million a year ago to $7 million.
Based on the performance, Bob Evans raised its earnings forecast for the year, even though pork costs are expected to remain high.
“The new guidance is a very pleasant surprise to me,” said William Morris, an analyst with Baraboo Growth. “I think most of the Street expected (Bob Evans) to take guidance down.”
Wall Street responded by sending its shares up 7 percent, or $4.46 per share, to close at $68.44.
“We are very pleased with the strong start to the fiscal year, delivering significant volume growth in both refrigerated side dishes and sausage during the first quarter,” CEO Mike Townsley said.
In response to analysts’ questions, Townsley and Chief Financial Officer Mark Hood said the company was able to raise its forecast because sales of side dishes are growing at a double-digit clip and are more profitable than sausage. And the increase in bacon prices has pushed some consumers to buy sausage instead.
The acquisition of Pineland Farms, a potato side-dish producer in Maine, added significant sales and helped bump Bob Evans’ already dominant market share of refrigerated side dishes up another 2.5 percent to 53 percent nationally.
Townsley also said that Bob Evans picked up a new account, an unnamed “club” retailer — a segment that includes Costco and Sam’s Club.
“We contend this is a critical strategy for (Bob Evans),” said Stephen Anderson, an analyst with Maxim Group.