John B. Sanfilippo & Son NASDAQ: JBSS reported fiscal third-quarter 2026 results highlighted by record net sales growth driven primarily by higher pricing, while profitability declined year over year amid lower inventory valuation adjustments and a softer consumer environment in key categories.
Net sales rise 8% as pricing offsets flat volume
Net sales increased 8% to $281.8 million in the third quarter of fiscal 2026, up from $260.9 million a year earlier, according to Chief Financial Officer Frank Pellegrino. The company attributed the increase to an 8.3% rise in the weighted average sales price per pound, while overall sales volume was “essentially flat.”
Pellegrino said sales volume declined for “substantially all major product types,” but increased for walnuts, pecans, and mixed nuts. He added that the higher average selling price reflected pricing actions taken in response to higher commodity acquisition costs “for all major tree nuts and peanuts,” along with a product mix shift toward higher-priced items.
Channel performance mixed, with strength in commercial ingredients and contract manufacturing
While total company volume was stable, management pointed to improving momentum across channels. Chief Executive Officer Jeffrey Sanfilippo said sequential quarter volume improvement was an early indication that the company’s “volume growth initiatives are beginning to gain traction,” and singled out better performance in commercial ingredients and contract manufacturing.
- Consumer channel: Sales volume decreased 4.5%, driven primarily by a 5.3% decline in private brand sales tied to lower private label bar volume, Pellegrino said. He cited continued softness in the bar category at a mass merchandise retailer and a “strategic decision to reduce sales to a grocery store retailer” as contributors. Nuts and trail mix were pressured by “elevated retail prices, reduced promotional activity, and discontinuation of underperforming items,” partially offset by new private branded walnut distribution at an existing grocery retailer and promotional pricing on walnuts and peanuts at an online retailer. Branded sales also benefited from “limited opportunistic orders for Orchard Valley Harvest to a customer in the non-food sector.”
- Commercial ingredients: Sales volume increased 14.3%, mainly due to higher food service sales volume at new and existing customers, plus increased sales of peanut crushing stock, Pellegrino said.
- Contract manufacturing: Sales volume increased 16.5% driven by increased snack nut sales to “a significant customer” being onboarded since the second quarter of the prior year, partially offset by decreased granola sales volume, according to Pellegrino.
In the Q&A session, an analyst asked whether shifting volume between the retail segment and contract manufacturing mattered. Pellegrino responded, “It does not,” noting that “every customer has a different channel classification.”
Margins decline year over year; net income falls despite higher sales
Gross profit decreased $2.1 million, or 3.8%, to $53.8 million. Gross margin fell to 19.1% of net sales from 21.4% in the prior-year quarter. Pellegrino said the decline was driven by “significantly lower inventory valuation adjustments compared to the prior year,” partially offset by higher net sales.
Total operating expenses increased $2.3 million year over year, driven by higher incentive compensation. That was partially offset by lower compensation costs, lower rent expense, and a gain on the sale of non-core equipment. Operating expenses as a percentage of net sales remained unchanged at 10.6%.
Interest expense declined to $500,000 from $1.1 million, which Pellegrino attributed to lower average line of credit levels. Net income fell to $16.8 million, or $1.43 per diluted share, compared with $20.2 million, or $1.72 per diluted share, in the year-ago period.
Category trends: nut and trail mix volumes soften; bars show modest growth
Jeffrey Sanfilippo provided category commentary using Circana data for the 12 weeks ending March 22, 2026. He said the “broader snack aisle” showed modest growth, with volume up 0.5% and dollars up 5%, consistent with the prior quarter.
However, he said the snack nut and trail mix category declined 6% in volume while dollars rose 1%, describing it as “an acceleration of the volume softness we saw last quarter.” He said snack nut prices rose 8% with increases across nearly all nut types, and trail mix prices rose 6%.
- Orchard Valley Harvest: Up 33% in pound shipments, which Jeffrey Sanfilippo attributed to “the launch of an innovative platform paired with additional shipments to a specialty retailer.”
- Southern Style Nuts: Down 6% in pound shipments, driven by softness “primarily in our e-commerce channel.”
- Fisher Snack Nut and Trail Mix: Down 8% in pound shipments, which he said reflected less promotional activity along with broader category headwinds.
- Private label consumer snack and trail: Down 4% in pound shipments, in line with the category.
In recipe nuts, Jeffrey Sanfilippo said the category was up 5% in pounds and up 17% in dollars, driven by private label growth and discount retailers expanding store counts. Recipe nut prices increased 11%, driven by higher walnut and pecan prices. Fisher Recipe pound shipments declined 8% due to slower velocities among grocery retailers, he said.
In bars, he said the category grew 2% in pounds and 6% in dollars, driven by branded growth in the protein segment. Private label bars were flat in pounds and down 1% in dollars. The company’s private label bar shipments declined 17% year over year due to softness at a major mass merchandiser.
Capacity expansion and strategic initiatives
Management emphasized ongoing investments intended to support longer-term growth, including expanded bar manufacturing capabilities. Jeffrey Sanfilippo said the company’s board recently met at its Elgin, Illinois headquarters and reviewed investments in bar manufacturing, including touring “the new equipment installation in the plant.” He described the effort as “transforming our business” and said the company plans to host an investor day “sometime in October” to showcase the changes.
On capacity, Chief Operating Officer Jasper Sanfilippo said installation of a bar line was “90% done with the processing and the packaging side,” with remaining work focused on building kitchens and auxiliary support such as dust collection and bulk storage. He said that for “nine months out of the year,” the company does not need additional capacity for mainstream bars, though it expects “a pretty large spike for back to school.” He also said the company is working to expand distribution for protein bars, noting that kid protein bars are expected to enter the market “within the next four to six weeks at a major retailer,” and added that protein bars are “margin accretive” relative to mainstream bars.
Jeffrey Sanfilippo also pointed to efforts to diversify the customer base, saying the company has “important customer concentration” it is looking to reduce. He said teams are pursuing new customers in the consumer channel as well as in contract manufacturing and commercial ingredients, and are also looking to expand within existing retailers into additional departments, citing pharmaceuticals as one area where the company does “very little business” today.
Management also cited external uncertainties. Jeffrey Sanfilippo discussed ongoing tariff-related headwinds, including the launch of a new U.S. Customs electronic system, CAPE, to handle tariff refund claims, while noting uncertainty over how quickly the backlog will be processed. He said the company is engaging with 20 suppliers representing about 90% of total tariff surcharges. He also cited global events contributing to elevated fuel prices and higher costs for related materials, adding that the procurement team is monitoring volatility and assessing alternative suppliers where possible.
Looking ahead, Jeffrey Sanfilippo said the company is monitoring consumer sentiment, which he said is showing “early signs of stabilizing,” while acknowledging uncertainty tied to rising global tensions and their impact on energy prices and supply chain dynamics.
About John B. Sanfilippo & Son NASDAQ: JBSS
John B. Sanfilippo & Son, Inc is a family‐held processor and marketer of tree nuts and snack nut products. Headquartered in Elgin, Illinois, the company operates manufacturing facilities, processing plants and sales offices across the United States and abroad. It supplies a broad range of channels, including retail, foodservice, industrial and private‐label customers.
The company's product portfolio spans in‐shell and shelled pecans, walnuts, almonds, cashews, pistachios and peanuts, as well as mixed‐nut blends, chocolate‐covered treats, granolas and specialty snack items.
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