Andrew Wolf: Okay. So that was all inter-quarter. It wasn’t for previous accrual rates that were too high…
Ken Plunk: No, that wasn’t — yes. That was inter-quarter. That will happen each quarter, give or take. If things stay stable, then you wouldn’t see much of any movement there.
Andrew Wolf: So are handheld sales down this quarter and last quarter basically because of deflation and the contract arrangement? Or is there other reasons the sales dollars were down?
Ken Plunk: The sales dollars are mainly down because of the contractual pass through of those costs back to the customer.
Andrew Wolf: Got it. Thank you.
Operator: Thank you. [Operator Instructions] And our next question is going to come from the line of Robert Dickerson with Jefferies. Your line is open. Please go ahead.
Robert Dickerson: Great. Thanks so much. So guys, I’m just curious. Maybe it’s on me, but I didn’t really realize there was going to be a 53rd week. So once we back out 53rd week, right, you get to sales growth about 4% in a quarter. And while I respect it, you don’t always break out kind of price and volume relative to other companies. I’m just curious, could you maybe add some color. Would you say, of the 4%, like most of that still is pricing? I’m just trying to gauge kind of volume trajectory, especially just vis-a-vis kind of the overall backdrop we are seeing right now and kind of much of food in the U.S.
Ken Plunk: Yes. Let me kind of explain it this way. And there’s a lot into that in terms of really trying to narrow down to the puts and takes of one extra week. And so we summarize that in the release based on our business overall. But if you take two parts of our business, retail and frozen beverages, both up over 20%. You back out the extra week, both of those businesses were up double digits, and both would have been at or near double-digit volume growth. So very healthy quarters there. If you look at food service, came in at 5.3%, but you’ve got the handheld negative against that that I just explained to Andrew, which was really more of a cost pass-through, not a volume thing. You start to break that out. food service would have grown 8.5% without that effect.
If you focus on the core categories in food service, pretzels, churros, and frozen novelties, those are up 11.5%. So you start to see, even peeling back the extra week, a very strong quarter and really volumes up across the board, probably other than bakery. And that’s really a part of what we’ve been talking about. In bakery, we’ve been dialing in on SKUs and getting out of some SKUs that weren’t profitable. So that’s probably the best way to kind of think about each of those segments and the 53rd week.
Robert Dickerson: Okay. Great. So kind of net-net, still, positive volume growth, kind of despite pricing you’ve taken, kind of overall?
Dan Fachner: Yes. Absolutely.
Robert Dickerson: Okay. And then — that’s great. And then I guess just kind of more broadly speaking, just kind of want to get your feel around kind of current consumption behavior, like what you’ve been seeing, right? We’ve heard from, let’s say, some confection companies that might say, well, maybe we’ve seen a little recent pressure and consumers might be shopping at perimeter of the store or maybe they’re looking for products that are more satiating in quality. Everyone’s kind of shopping for more value. There’s been channel shifts, a lot. Walmart this morning, right, saying last couple of weeks of the quarter definitely saw some pressure. But it sounds like kind of given that positive volume, consumers are still kind of walking into a Wawa, buying a snack or going to the movie theater, getting an ICEE drink.
So I’m just kind of curious kind of what your feel is around consumption behavior with your product. Like why are you still able to generate this volume graph? Is because it’s the value proposition, right? That tastes good. It’s satiating or just anything you have will be very helpful. Thank you.
Dan Fachner: Right. Good morning, Rob. How are you doing?
Robert Dickerson: I’m great. Thank you.
Dan Fachner: Good. I think it’s a great question and kind of expected to — anticipated to get something along that line. We’re watching the customer and the consumer really, really closely and watching that behavior. We faced a lot of headwinds since we’ve been in this position. We are prepared as a company to kind of be able to pivot in any direction that we need to pivot. We’ve talked a lot about the resiliency of the J&J portfolio. Partly we sell across a lot of different channels with a lot of products, many of them with tremendous brand that people follow and use as a treat or a reward. And I really believe it’s that diversification that we have across channel, across brands that allows us to be resilient during times like this, right?
You’ve watched it even as we’ve been in charge here and led the organization. There’s been times when the theater business is down, but the retail is way up, right? And then we go through a year like last year where theaters are way up and we’re challenged in other areas. We are really proud of the diversification that we have and the products that we have and the following that the brands are. And I think that allows us to withstand periods like this.
Robert Dickerson: All right. Super. Fair enough. Thank you, guys.
Dan Fachner: Thank you, Rob.
Ken Plunk: Thanks, Rob.
Operator: Thank you. And I would now like to turn the conference back over to Dan Fachner for any closing remarks.
