This story was originally published on Supply Chain Dive. To receive daily news and insights, subscribe to our free daily Supply Chain Dive newsletter. Dive Brief: J&J Snack Foods is initiating a business transformation with an initial focus on consolidating its manufacturing network, according to its Q4 2025 earnings call last month. As part of the plan, the company said it is closing three production facilities by the end of Q1 2026, including sites in Atlanta; Holly Ridge, North Carolina; and Colto ...

Core Insights - J&J Snack Foods is implementing a transformation program called Project Apollo aimed at cost savings, factory consolidation, and profit enhancement [1][3] - The program is expected to generate $20 million in annualized operating income by fiscal year 2026, which began on September 28 [1] - The first phase involves closing three production plants in North Carolina, Georgia, and California, with production being consolidated or discontinued [2][3] Financial Performance - In the fourth quarter ending September 27, the company reported a 28% decrease in operating income to $84.3 million [2] - Net sales fell 4% to $410.2 million, attributed to a strong prior year performance in frozen beverages linked to a movie release [6] - Operating expenses increased by 24% to $118.8 million, representing 29% of group sales, due to site closures and included $24.8 million in non-recurring charges [5] Cost Savings and Future Plans - The factory changes are expected to yield $15 million in annualized cost savings, with an additional $3 million from various distribution initiatives [3][4] - A second phase of Project Apollo will focus on improving efficiencies in the remaining plant network and modernizing technology systems [4] - The company anticipates further expenses of $3-5 million in the new financial year related to the ongoing transformation [5]

Core Insights - The analyst has a strong background in equity research and investment analysis, with a focus on the U.S. equity market and consumer staples sector, indicating a belief in the resilience of defensive stocks for long-term investment opportunities [1]. Group 1: Analyst Qualifications - The analyst is a certified FMVA and FPWMP, which provides expertise in financial statement analysis, valuation modeling, and investment portfolio construction [1]. - Participation in the CFA Research Challenge has equipped the analyst with practical experience in equity analysis and industry research [1]. - The analyst holds a degree in Finance from Alexandria University, graduating in 2024 with a CGPA of 3.6, showcasing a solid academic foundation [1]. Group 2: Professional Experience - The analyst has worked with a confidential client, preparing investment reports across various sectors, including healthcare, consumer staples, and industrials, enhancing the ability to evaluate companies across diverse industries [1]. - In 2023, the analyst joined AIESEC, further developing leadership, communication, and teamwork skills through global exchange and project collaboration [1].

Economic Outlook - The risk of a U.S. recession has increased, with estimates for a recession in 2025 or within the next year ranging from 40% to 60% according to various Wall Street firms and economists [3][4][21] - Goldman Sachs raised its one-year recession-risk probability to 45% from 35%, while JPMorgan set the odds at 60% [3][4] Stock Performance During Recessions - Defensive stocks, which typically pay dividends, are expected to perform better during economic downturns [5] - Categories of stocks that tend to hold up well include consumer staples, utilities, healthcare, and discount retailers [7][8] Historical Context - The Great Recession lasted from December 2007 to May 2009, with the S&P 500 index dropping 35.6% during this period [10] - Stocks that performed well during the Great Recession include Netflix, iShares Gold Trust ETF, J&J Snack Foods, Walmart, and McDonald's, with Netflix showing a return of 70.7% [12][15] Specific Stock Insights - Gold mining stocks and ETFs, such as Newmont and iShares Gold Trust, are seen as potential safe havens during recessions [17] - "Small indulgence stocks," like Netflix and Hershey, may see continued consumer spending even in downturns [18] - Utility stocks, such as American Water Works and NextEra Energy, have shown strong long-term performance, challenging the notion that they are merely "widow and orphan stocks" [19] Investment Strategy - Investors are advised to review their stock portfolios to enhance recession resistance while remaining invested in the market [21][22] - Long-term investors should avoid drastic changes to their portfolios, as timing the market can be challenging [23]