Increased spending on marketing, advertising and promotions (MAP) is paying off for Jimmy Dean sausage maker Hillshire Brands, which has raised its outlook for the full year on the back of strong second quarter results.
The former North American business of Sara Lee, which split into two last summer following the spin-off if its international coffee arm, Hillshire Brands is on a mission to become the "most innovative meat-centric food company in the US".
However, it has historically suffered from a lack of investment in ‘power brands’ Hillshire Farm and Jimmy Dean, said CEO Sean Connolly on an earnings call last week.
“Everybody knows with the old Sara Lee business, the MAP, the absolute level of spend was light… So we're putting more MAP spend out there, and we've got new agencies in place. We've got new communication strategies.
“What you'll continue to see is us putting the MAP resources primarily against our power brands.”
Hillshire Farm lunchmeat returned to volume growth in Q2
And it is already paying off, he added: “We were pleased to see Jimmy Dean's new biscuit line get off to a strong start. These products are consistent with our strategy to continue to push into snacking categories.
“On Hillshire Farm, we were expecting to see lunch meat begin to respond to our programming, and I'm pleased to say that it did. After a long time of very little MAP support, Hillshire Farm lunch meat advertising is back in full swing.
“We returned to air late quarter 1 with a new campaign that takes the brand back to its quality heritage. As you all know well, Hillshire Farm lunch meat has been struggling for some time now. So I'm pleased to say that with the support of our marketing tools, Hillshire Farm lunchmeat returned to volume growth this quarter.”
‘Frankly, there are positive signs throughout our consumption data’
New packaging and product improvements that will be rolled out this month were also likely to positively impact sales, he predicted.
“To be clear, it's still early days, and we're not declaring victory in any way on the turnaround of Hillshire Farm lunch meat. However, these are positive early signs on an important business for us… Frankly, there are positive signs throughout our consumption data.”
He added: “We have several great new products that will be hitting the marketplace soon across our portfolio.”
Full-year earnings guidance increased
Q2 adjusted net income from continuing operations rose to $76m compared with $56m in the year-ago period, while adjusted net sales rose 2.5% to $1.1bn. It raised full-year earnings guidance to $1.60 to $1.70 per share, up from $1.40-1.55/share.
The Chicago-based firm - best known for its Jimmy Dean, Ball Park, Hillshire Farm, State Fair, Aidells and Gallo brands - announced today it has completed the sale of its Australian subsidiary Kitchens of Sara Lee to a subsidiary of McCain Foods.
The Australian business has around 500 employees and one primary manufacturing facility in Australia.