TreeHouse Foods predicts a resurgence in private label products and is looking into strategic alternatives including a sale, executives said at a quarterly earnings call.
TreeHouse posted$1.1 billion in sales for the quarter ended Sept. 30, a 5.4% increase over the same period last year. Net income, however, was down 45%, to $6.7 million.
CFO Bill Kelley said that the drop in income was “primarily due to the escalation in industry-wide inflation and supply chain disruption.” He added that TreeHouse would likely raise prices for its own products to deal with inflation.
Private-label products, which TreeHouse specializes in, have been declining in sales during the pandemic. CEO Steve Oakland said he expects private label’s market share to come back.
He blamed the decline in private label sales during the pandemic on logistics. Private label in general is more susceptible to logistic disruptions than branded products because it’s built on “a complexity model,” Oakland said.
That view was echoed in a separate interview by Aimee Becker, senior vice president at Daymon, a consultancy that specializes in private label. She said that private label sales were high in the initial stages of the pandemic, but that as it continued, private label manufacturers were hit especially hard with supply-chain problems, leading to out-of-stocks.
“With these out-of-stocks, shoppers were not making a conscious decision to deter from private brand items – rather buying what was currently available on shelf,” Becker says.
Oakland also addressed the strategic review process, saying that possibilities include divesting its Meal Preparation businesses or selling the entire company.