Private-label manufacturer TreeHouse Foods has announced that it will be reducing prices for the remainder of the year, following the lead of other branded grocery companies. Despite implementing a pricing increase of 11.2% in the second quarter, TreeHouse Foods’ own-label products continue to outperform branded products due to cautious consumer spending in the current cost-of-living environment. In a recent presentation, chairman, president, and CEO Steven Oakland highlighted the strength of private-label groceries in North America and the growing consumer preference for snacking, positioning TreeHouse at the intersection of these two trends.
As increasing shelf prices put pressure on consumers, retailers are turning to private-label products to retain customers. This trend is expected to continue, further benefiting private-label manufacturers like TreeHouse Foods. The company reported a 4.1% increase in second-quarter sales, reaching $843.6 million. Although volume/mix saw a decline, this was primarily due to front-loading orders in the first quarter as TreeHouse Foods improved its service levels following pandemic-related challenges.
Year-to-date sales also showed growth, increasing by 9.8% to $1.7 billion. However, volume/mix decreased by 3.9%, while pricing saw a significant increase of 13.9%. Oaklland noted that TreeHouse Foods’ decision to exit some lower-margin business during the quarter will result in improved volumes moving forward.
Looking ahead, TreeHouse Foods expects volume and mix to be the primary drivers of top-line growth for the remainder of the year. The company’s second-quarter adjusted EBITDA rose by 43% to $76.4 million, with a net income of $21.7 million compared to a loss of $27.3 million in the previous year. As a result, TreeHouse Foods adjusted its sales growth outlook for the full year to 7.5% to 9.5% and narrowed the guidance range for adjusted EBITDA to $360-370 million.
CFO Patrick O’Donnell emphasized that the company anticipates a step down in pricing contribution for the second half of the year, as they compare against last year’s price adjustments. By focusing on volume growth, TreeHouse Foods aims to strengthen its position in the market and drive further success in the food and beverage industry.
