Pinnacle Foods Inc. has decided to eliminate “certain low-margin and non-strategic Aunt Jemima frozen breakfast products” sold to retail and foodservice customers. The May 8 announcement came several days after a recall of 18 Aunt Jemima stock keeping units (SKUs) due to potential Listeria monocytogenes contamination.
“The decision to exit these products now was the appropriate action for Pinnacle,” said CEO Mark Clouse. “It is consistent with our plans to enhance the ongoing margin of the company and focus our efforts and investments on more profitable growth opportunities longer term. While the timing of this exit was accelerated by the voluntary recall we initiated last week, these items are low-margin, non-strategic SKUs that we expected to exit at some point in the foreseeable future. The benefit we now expect from the lower Adjusted ETR this year is forecasted to offset this business decision, enabling us to reaffirm our guidance for 2017.”
The Aunt Jemima frozen retail products being jettisoned from the portfolio include 16 SKUs across frozen waffles, frozen french toast slices and frozen pancakes. In addition, the company is exiting select frozen breakfast items sold to foodservice customers.
While 18 Aunt Jemima SKUs will dropped from the portfolio, Pinnacle will continue to make and market “higher-margin” products such as Lil’ Griddles Blueberry Mini Pancakes.Frozen Aunt Jemima retail products that the company will continue to sell represent higher-margin and more differentiated items, including mini pancakes, french toast sticks, breakfast entrees and Griddle Poppers. Pinnacle makes, distributes and markets Aunt Jemima frozen breakfast products under a trademark license agreement with The Quaker Oats Company.
The company anticipates a non-cash charge of approximately $50 million to $60 million for the write-down of both the tangible and intangible assets associated with the exit. This charge, along with severance and other expenses related to the action, are expected to occur in the second quarter and will be treated as items affecting comparability.
