John B. Sanfilippo's Profit Drops 38% as Margin Pressure Deepens
The nut processor's fourth-quarter earnings fell to 71 cents a share as a recall, higher input costs and freight expenses eroded margins despite record annual sales of $1.18 billion.
John B. Sanfilippo & Son (JBSS), the nut and snack processor, closed its fiscal year with fourth-quarter earnings down sharply, as a product recall, rising commodity costs and manufacturing inefficiencies overwhelmed a modest gain in sales volume.
Diluted earnings per share fell 38.3% to $0.71 in the quarter ended June 26, compared with $1.15 a year earlier, a steeper decline than the 16.9% drop recorded in the third quarter. Gross profit contracted 9.5% to $44.1 million, compressing the gross margin to 15.7% from 18.1% a year ago, a sharper squeeze than the prior period's 3.8% decline.
The margin erosion traced to a cluster of cost pressures. Recall-related expenses tied to contaminated dry milk powder from a third-party supplier totaled $2.7 million in the quarter. The company also absorbed higher freight charges, elevated customer claims, rising snack bar ingredient costs and manufacturing inefficiencies stemming from the ramp-up of a large contract manufacturing customer. Operating expenses as a share of sales widened to 11.3% from 10.6%, reflecting higher incentive compensation and marketing outlays.
Net sales rose 4.2% to $280.4 million, decelerating from the third quarter's 8.0% pace. Volume increased 1.4% to 87.4 million pounds, ending five consecutive quarters of decline. The consumer channel turned positive, with volume up 0.8% after a 4.5% drop in the prior quarter, led by a 2.4% increase in private-brand sales. Contract manufacturing volume grew 12.6%, moderating from 16.5% in the third quarter but still driven by the significant new customer onboarded in the second quarter of fiscal 2025.
The weighted average selling price per pound rose just 2.8% in the quarter, a sharp deceleration from 8.3% in the third quarter, as pricing actions taken to offset higher commodity costs were partly offset by a mix shift toward lower-priced items. Commercial ingredients volume swung to a 5.4% decline from a 14.3% gain, largely reflecting the timing of peanut-crushing stock sales that had been elevated in the prior quarter.
For the full fiscal year, net sales reached a record $1.18 billion, up 6.2%, propelled by an 8.9% increase in weighted average selling price per pound that more than offset a 2.5% volume decline. Full-year diluted EPS rose 4.6% to $5.26, even as the annual gross margin narrowed to 18.0% from 18.4%.
The company's balance sheet showed the cost of its expansion. Properties, net, climbed to $256.0 million from $178.2 million a year earlier, reflecting significant capital investment. Inventory fell $8.8 million, or 3.4%, but the weighted average cost per pound of raw nuts and dried fruit on hand rose 12.1%, driven by higher pecan and almond acquisition costs, partially offset by lower walnut prices. Interest expense, meanwhile, declined to $419,000 in the quarter from $1.209 million a year ago, and fell to $2.429 million for the full year from $3.552 million.
The company raised its annual dividend 5.6% to $0.95 a share, marking a ninth consecutive annual increase, and declared a special dividend of $1.05 a share, up 75% from the prior year. Total dividends paid in calendar 2026 reached $3.50 a share.
A leadership transition is also underway. Chief Executive Jeffrey Sanfilippo said he will step down in October 2026 to become executive chairman, with his brother Jasper succeeding him as CEO.
Sources: JBSS Q4 FY2026 Earnings Release, Aug. 19, 2026; JBSS Q4 FY2026 Earnings Release supplemental data; JBSS Q4 FY2026 Earnings Release, management commentary; JBSS FY2026 Annual Report; JBSS CEO succession announcement; JBSS Q4 FY2026 financial statements; JBSS FY2026 balance sheet; JBSS dividend declarations; JBSS Q3 FY2026 Earnings Release; JBSS Q3 FY2026 Earnings Release, channel data.