Lancaster Colony Corporation (NASDAQ:LANC) reported consolidated net sales increased 1.8% in FQ2 to a record level of $485.9M.
Retail segment net sales grew 2.0% to $264.0M during the quarter. Retail segment sales volume, measured in pounds shipped, declined 1.9%. Lancaster Colony (LANC) pointed to the favorable impact of its FY23 pricing actions. Licensing programs for Chick-fil-A sauces and dressings, New York BRAND Bakery frozen garlic bread products, and Reames frozen egg noodles were also positive contributors.
In the Foodservice segment, net sales improved 1.5% to $221.9 million despite deflationary pricing. Foodservice sales volume, measured in pounds shipped, increased 4.6% led by higher demand from several of our national chain restaurant accounts along with volume growth for our branded Foodservice products.
Consolidated gross profit came in at 19.0% of sales, which was said to reflect favorability in pricing net of commodity costs and the impact of cost savings initiatives. Partial offsets to those positive factors included higher labor costs and increased depreciation expense. Consolidated operating income grew 28.1% to a FQ2 record $65.8M, driven by the increase in gross profit partially offset by the higher SG&A expenses. Net income increased to $51.5M, or $1.87 per share vs. $1.45 per share last year and above the consensus estimate of $1.65.
CEO outlook: “Looking ahead to our fiscal third quarter, we project Retail sales will continue to benefit from our expanding licensing program while, in the Foodservice segment, we expect sustained volume growth from select quick-service restaurant customers. We anticipate continued favorability in our pricing net of commodity costs, but at a sequentially lower level compared to our fiscal second quarter. Deflationary pricing is expected to remain a headwind to Foodservice segment net sales.”
Shares of Lancaster Colony (LANC) rose 1.15% to $185.90 in premarket trading.