J.M. Smucker to lay off undisclosed number of employees

Source: fooddive.com

Dive Brief:

  • The J.M. Smucker Company will be laying off an undisclosed number of employees as it is “evolving our corporate organizational structure,” according to an emailed statement. Specifics about the roles these employees play in the business, their location and the timeline of these layoffs were not disclosed.
  • In a call with investors following the company’s earnings report last week, CEO Mark Smucker said this decision was made to ensure the long-term health of its business. “We really want to create a leaner and flatter organization, ensuring that we align ownership accountability, incentives and so forth to the financial statements, and we do have high confidence this is going to make us more agile,” he said according to a transcript of the call.
  • While increased home consumption of food during the COVID-19 pandemic has pushed many big food companies into the black, several have announced layoffs as they retool their operating structures for the future. Danone, Coca-Cola and Clif Bar have all recently announced job cuts as they work toward restructuring.

Dive Insight:

In the days before Smucker reported earnings for its most recent quarter, media outlets near the Orrville, Ohio-based company reported on a nebulous statement that it would have layoffs.

“Consumer behavior has evolved rapidly in recent years and the COVID-19 pandemic has caused an even greater acceleration of that change,” the statement said.

To respond, J.M. Smucker is changing its corporate structure, investing in growing areas of the business, and evolving its portfolio to ensure its brands align with consumer preferences. And these changes, the company said, will result in lost jobs.

“Since conversations are ongoing with employees, we will not be sharing any more details,” the statement said. “Decisions that negatively impact any of our employees are always difficult to make and are only made after careful consideration. Transitioning employees will receive severance support.”

The announcement seems somewhat out of place, considering Smucker’s strong results and growth in its most recent earnings report. Net sales were up 5% over the year ago period, totaling more than $2 billion. Coffee sales were up 12% and retail consumer foods sales increased by 6%. Pet food sales were also up 6%. The only major part of the company’s business that was hurting: its away-from-home operating segment, which saw a 27% decline in sales. Because the lion’s share of Smucker’s sales come from its retail businesses, this was not enough to bring down the company’s overall growth. 

However, Smucker has been working in the past six months to sharpen its focus and compete at a higher level. In September, the company unveiled its new corporate logo, which took the focus off of its namesake jams and jellies to better highlight its diverse portfolio. Last month, it announced a new set of ESG priorities that established goals for sustainable packaging, community assistance and promoting inclusion.

At a virtual investor day in December, Mark Smucker announced a new four-point strategy to “fundamentally transform how we execute our strategy” and move the company forward: driving commercial excellence, streamlining cost infrastructure, portfolio reshaping and unleashing the organization to win. During the presentations from executives, nobody hinted at future layoffs, though several echoed a commitment to streamlining processes, right-sizing infrastructure and work streams, and maximizing efficiencies — all which could mean laying off employees. Executives said this would take place during the next 12 to 18 months.

It’s unclear how this is playing out with actual employees. According to the company’s 2020 annual report filed with the U.S. Securities and Exchanges Commission, Smucker has about 7,300 employees and 26 manufacturing facilities across the U.S. and Canada. The company expanded its manufacturing footprint in 2019 with a new factory to make Uncrustables premade sandwiches in Longmont, Colorado — and is currently expanding it with the second phase scheduled to be operational in 2022. It’s unlikely that any cuts will come to this product line; at the virtual Consumer Analyst Group of New York conference last month, Mark Smucker said it was one of the company’s key growth drivers and that it expected double-digit top and bottom-line growth for the next several years.

Smucker has been working to focus its portfolio as well. It sold Crisco oils and shortening, the last brand in its once-sizable baking business, to B&G Foods last year. It also recently divested its Natural Balance pet food brand to investment firm Nexus Capital Management. At investor day, Amy Held, the company’s chief strategy and international officer, said the company would continue to take a hard look at its portfolio.

Through these changes, Smucker’s transformation seems to be underway. However, such an unclear message on layoffs is likely to worry its employees. Though this sort of announcement may work when it is specific to layoffs around a certain job function and not a location or product, it doesn’t give Smucker’s workforce or investors much clarity on what may be happening next.