J & J Snack Foods Corp (NASDAQ:JJSF) stock fell 3.77% (As on November 14, 11:29:18 AM UTC-4, Source: Google Finance) after the company posted lower than expected results for the fourth quarter of FY 24. Net income was USD 29.64 million compared to USD 30.42 million a year ago. Basic earnings per share from continuing operations was USD 1.52 compared to USD 1.58 a year ago. The softer consumer trends, together with less sales days, had a marked impact on sales of core products including soft pretzels, churros, frozen beverages, frozen novelties, and Dippin Dots, negatively impacting gross margin mix, and creating production and supply chain inefficiencies as the company balanced demand and inventory in the plants and distribution centers. This led to a gross margin of 31.8%, a 110-basis point decline compared to a record fiscal 2023 fourth quarter gross margin of 32.9%. Operating income and Adjusted EBITDA decreased 4.5% and 4.0%, respectively. Total operating expenses of $95.7 million represented 22.4% of sales for the quarter, a 100 basis point improvement compared to 23.4% of sales in Q4 ’23.

Further, across the portfolio of raw materials, the company experienced net mid-single-digit inflation, with the increase primarily driven by higher cost of cocoa/chocolate, and to a lesser extent, increases in the cost of sugar/sweeteners, eggs, and meats. These increases were somewhat offset by deflationary trends seen in flour, cheese and dairy, and mixes. Pricing adjustments and contractual cost true ups helped minimize the majority of the impact, but continued inflation in chocolates and sugar is driving consideration of further price increases and cost of goods initiatives to manage gross margins.

Moreover, during the quarter, Food Service segment sales declined 3.0% to $262.2 million, but increased 4.6% on a normalized basis versus Q4 ’23. Retail segment sales declined 13.7% to $55.9 million, and decreased 5.7% on a normalized basis versus Q4 ’23. Frozen Beverage segment sales declined 0.1% to 108.7 million, but increased 7.7% on a normalized basis versus Q4 ’23.

JJSF in the fourth quarter of FY 24 has reported the adjusted earnings per share of $1.60, missing the analysts’ estimates for the adjusted earnings per share of $1.88, according to Zacks Investment Research. The company had reported the adjusted revenue decline of 3.9 percent to $426.8 million in the fourth quarter of FY 24, missing the analysts’ estimates for revenue of $430.1 million.