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: TreeHouse Foods shares jump as private-label goods make gains across income levels

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TreeHouse Foods Inc. says consumers are buying more private-label foods as inflation takes a toll.

Shares rose 9.7% in Monday trading after the company reported a narrower-than-expected first-quarter loss and revenue that beat expectations.

Net loss totaled $3.0 million, or 5 cents per share, after the private-label food producer posted a net income of $1.5 million, or 3 cents per share, last year. Adjusted loss per share of 15 cents was well ahead of the FactSet consensus for a loss of 52 cents per share. Sales of $1.141 billion were up from $1.057 billion and also ahead of the FactSet consensus for $1.093 billion.

TreeHouse Foods
THS,
+14.46%

operates across 29 product categories and 40 production facilities in North America and Italy. The company announced in March that it would be turning its attention to the “high growth” Snacking & Beverage category.

TreeHouse has raised prices, and will raise them further at the beginning of the third quarter.

“The private label proposition is becoming increasingly important to our customers and their consumers as they manage a higher cost macro environment and seek better value,” said Chief Executive Steve Oakland in an earnings statement.

“This has translated into private label consumption growth and unit share gains in measured channels.”

On the earnings call, Oakland said private labels are making gains in households with income both above and below $100,000.

See: Lower-income consumers will start tightening their belts by trading down to private label goods in 2022, analysts say

Also: Some U.S. states scale back food stamp benefits even as prices soar

Private label items have also gained favor with retailers.

“[R]egardless of whether they are value retailers, traditional grocers, club stores, experiential retailers or pure play e-commerce businesses, the bottom line is TreeHouse is a key partner for retailers as they look to drive loyalty, traffic, consumer experience and ultimately higher profit margin,” Oakland said on the call, according to FactSet.

Also: P&G makes the case for its premium products as consumer budgets battle shrinkflation and rising prices

For full year 2022, TreeHouse is guiding for net sales growth of at least 11% year-over-year with pricing to drive most of the sales growth. The FactSet consensus is for sales of $4.753 billion, implying growth of 9.8%.

TreeHouse shares are down 17.3% for the year to date.

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