Premier Foods (PRRFY) shares were trading modestly higher Thursday after it reported a fall in first-quarter sales and issued cautious guidance for the quarter ahead.
The grocery and frozen food distributor, and one-time bid target of McCormick (MKC) , said sales were down by 3.1% to £170.1 million ($221 million) in the the three months ending on July 1, its fiscal first quarter, thanks to weakness in its branded grocery division linked to warmer weather and reduced effectiveness of promotional activity. Premier's weak performance during the quarter was in-line with the board's expectations but below those of analysts.
Premier said it expects enough growth in the second quarter to offset the weaker first quarter, leaving first half sales flat with the year before, although the "weather permitting" caveat attached to this guidance by management left a sour taste in the mouths of investors.
Premier Foods shares were marked 0.32% higher at 38.55 pence each in the opening hour of trading in London, trailing the 0.6% advance for the FTSE 100.
"Our first quarter sales were lower than last year, as we expected, primarily due to lower sales volumes in the grocery categories, notably desserts," said CEO Gavin Darby. "We expect to report positive sales growth in the second quarter, broadly flat sales in the first half and our expectations to deliver progress in the full year are unchanged."
McCormick, which agreed to buy the foods business of Reckitt Benckiser (RBGLY) this week, made a move on Premier Foods in February last year with three separate preliminary offers. However, after making the third offer and undergoing a due dilligence review of Premier's books, the U.S. bidder walked away in mid-April.
Simultaneously, Premier announced that Japan's Nissin Food Holding (NFPDF) agreed to make a strategic investment in Premier by acquiring a 17.27% stake in the company.
The pair later entered a relationship agreement giving Nissin the right to appoint a director to the Premier board. Nissin currently owns 19.76% of Premier Foods.
On Thursday the British distributor said that it has successfully launched Nissin's Soba Noodles in the U.K., where they are now sold from three major supermarkets, underlining the merits to Nissin of its partnership with Premier.
