John B. Sanfilippo & Son, Inc. (NASDAQ: JBSS) (the “Company”) today announced operating results for its first quarter of fiscal 2014. Net income for the first quarter of fiscal 2014 was $6.8 million, or $0.61 per share diluted, compared to $7.5 million, or $0.69 per share diluted, for the first quarter of fiscal 2013. Approximately 50% of the $0.8 million decline in net income was attributable to the first quarter of fiscal 2013 containing a pre-tax gain on sale of assets of $0.6 million.
Net sales decreased slightly to $176.7 million in the first quarter of fiscal 2014 from net sales of $177.5 million for the first quarter of fiscal 2013 while sales volume, which is defined as pounds sold to customers, increased by 14.0%. The favorable impact on net sales from the sales volume increase was offset by lower selling prices. Selling prices decreased mainly in pecan and peanut products in response to lower acquisition costs. Competitive pricing pressure at two of our major private brand customers also contributed to the overall decrease in selling prices. Sales volume increased in the contract packaging, commercial ingredients and consumer distribution channels, and sales volume increased for all major product types except cashews and walnuts, both of which were relatively unchanged. The sales volume increase in the contract packaging distribution channel came primarily from new product launches and increased promotional activity implemented by a major existing customer. The sales volume increase in the commercial ingredients distribution channel was due primarily to increases in sales of (i) lower-priced products such as peanut crushing stock due to a record peanut harvest, (ii) almond products as a result of distribution gains achieved by a major existing customer and (iii) pecan products due to the favorable impact on customer demand from lower selling prices. The sales volume increase in the consumer distribution channel primarily came from increased sales of private brand trail mix, snack nut and peanut butter products. Increased sales of Orchard Valley Harvest produce products also contributed to the sales volume increase. The increase in sales volume for these products was partially offset by a sales volume decrease in Fisher inshell peanut products due to reduced distribution at a major Fisher snack nut customer as a result of competitive pricing pressure. Fisher recipe nut sales volume declined marginally mainly due to reduced merchandising activity at a major Fisher recipe nut customer.
Gross profit decreased by $1.2 million, and gross profit margin, as a percentage of net sales, decreased to 16.6% for the first quarter of fiscal 2014 compared to 17.2% for the first quarter of fiscal 2013. The decreases in the gross profit and gross profit margin occurred primarily because of reduced selling prices to two of our major private brand customers caused by competitive pricing pressure. The decreases in gross profit and gross profit margin were offset in part by manufacturing efficiency improvements achieved during the quarter and the increase in sales volume. The increase in sales volume did not fully offset the reduction in gross profit and gross profit margin because the sales volume increase was generated mainly by increases in sales of lower-priced products.
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