SJM's Coffee Strength Shines in Q1: What to Expect Through FY26?

The J.M. Smucker Company’s SJM coffee portfolio proved to be a pillar of strength once again in fiscal 2026. In the first quarter, the coffee category delivered a standout performance, offsetting softness across other segments and helping the company lift its fiscal 2026 net sales guidance to 3-5% growth from the earlier view of 2-4%. 

Sales in the U.S. Retail Coffee segment grew 15% year over year to $717.2 million in the first quarter, with pricing contributing an impressive 18 percentage points of growth. That momentum came even as volumes dipped 2%, pressured by higher prices and elevated green coffee tariffs. However, segment profit fell 22% to $134.2 million, reflecting higher commodity costs, unfavorable mix and stepped-up marketing spend.

Despite these pressures, management described the quarter as a strong start for the coffee business. Such a performance prompted the company to raise full-year coffee expectations by about $100 million, with pricing expected to remain in the mid-20 percent range through the balance of fiscal 2026.

However, J.M. Smucker is juggling higher costs and rising tariffs while trying to keep demand steady. SJM expects tariffs of more than 10% to reduce earnings per share by 50 cents this year. Nonetheless, management remains confident in the strength of its coffee brands and is focused on offering consumers good value.

J.M. Smucker expects the coffee business to remain a significant growth engine, with sequential improvement through the year as pricing, elasticity and category momentum stabilize. The company anticipates its strongest coffee margins in the fourth quarter, reaching the mid-20 percent range and setting up a healthy rate as it enters fiscal 2027.
 
Even in a tough cost environment, the performance of SJM’s coffee segment stands out as both a near-term cushion and a long-term driver, underscoring its critical role in the company’s growth trajectory. 
 

J.M. Smucker, currently carrying a Zacks Rank #3 (Hold), has seen its shares climb 0.3% in the past three months against the industry’s decline of 5.1%.

Consumer Staple Stocks to Consider

United Natural Foods UNFI engages in the distribution of natural, organic, specialty, produce, and conventional grocery and non-food products. It currently sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for United Natural’s current fiscal-year sales and earnings indicates growth of 2.4% and 167.6%, respectively, from the prior-year levels. UNFI delivered a trailing four-quarter earnings surprise of 416.2%, on average.

Vital Farms VITL packages, markets, and distributes shell eggs, butter and other products. It carries a Zacks Rank #2 (Buy) at present. VITL delivered a trailing four-quarter earnings surprise of 35.8%, on average. 

The Zacks Consensus Estimate for Vital Farms’ current fiscal-year sales and earnings implies an increase of 27.3% and 14.4%, respectively, from the prior-year levels.

Grocery Outlet GO operates as a retailer of consumables and fresh products. It carries a Zacks Rank #2 at present. GO delivered a trailing four-quarter earnings surprise of 28.2%, on average.

The Zacks Consensus Estimate for Grocery Outlet’s current fiscal-year sales and earnings indicates growth of 8.4% and 1.3%, respectively, from the prior-year levels.

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This article originally published on Zacks Investment Research (zacks.com).

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