Dean Foods Doesn't Expect Planned Wal-Mart Plant to Hurt Results
March 22 2016 - 5:10PM
Dow Jones News
Dean Foods Co. said it Tuesday that it doesn't expect a planned
Wal-Mart Stores Inc. dairy processing plant in Indiana to have a
material effect on its financial results.
Shares of the U.S. milk processor rose 2.7% to $17.37 after
hours.
In a regulatory filing, Dean Foods said it currently estimates
Wal-Mart's planned plant will result in the loss of roughly 100
million gallons of very-low margin, private-table fluid milk volume
beginning late next year.
"It's disappointing to learn of any potential loss of business,
but we remain confident in our future and the strategic plan, "
Dean Foods Chief Executive Gregg Tanner said.
Dean has been aiming to shift more of its business toward
branded milk and ice cream products that command higher profits in
grocery stores' milk cases and freezer sections, at a time when
alternatives like almond and soy milk have cut into sales of the
conventional kind.
"With more than a year advance notice and the low-margin nature
of the potential lost private-label milk volume, we expect to
govern our business such that this will result in very little
impact to our financials," Mr. Tanner said.
Earlier on Wednesday, Morgan Stanley said Wal-Mart's move
"underscores the challenges" facing Dean, though it will be more
than a year before Wal-Mart's 250,000-square-foot Indiana plant is
operational.
Dean Foods said its doesn't expect Wal-Mart's plans will affect
Dean's sales of its national brands, DairyPure and TruMoo, or sales
of its nonfluid milk products.
Write to Tess Stynes at tess.stynes@wsj.com
(END) Dow Jones Newswires
March 22, 2016 17:55 ET (21:55 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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