SJM · Q2 2026 Earnings

Narrative arc: Wide-band caution → Tariff relief on green coffee → Elasticity tailwind earned → Range narrowed around unchanged midpoint.

The Q1 brief described management explicitly justifying a wide $1.00 EPS band as prudent given visibility deterioration. One quarter later that band has been halved to 50¢ — but the midpoint held at $9.00, and the driver is a tangible macro positive: green coffee tariffs were removed by U.S. trade policy, prompting SJM to cancel a contemplated winter pricing action. The remaining ~50¢ tariff impact is a sunk cost already absorbed this fiscal year that laps next year — not an escalating risk. The press release language — "confident in our ability to deliver our financial outlook for this fiscal year" — pairs with a guide that resolves rather than widens the tariff overhang.

Tariffs moved from an itemized 25¢ at Q4, to a doubled net 50¢ at Q1, to — in Q2 — explicit resolution on the largest component: green coffee is now excluded. Management has bracketed the FY26 hit at ~50¢ unrecovered, and the elasticity outcome on May/August coffee pricing came in 40¢ better than they had previously assumed. The "dynamic and evolving" boilerplate remains in the press release, but the substantive tariff disclosure this quarter is one of resolution on the dominant input, not escalation.

The gross margin guide settling at 35.0% — the low end of the prior 35.0–35.5% range — is the cleanest read on what the unrecovered tariff absorption costs the P&L. Three sequential prints (35.5–36.0% at Q4, 35.0–35.5% at Q1, ~35.0% at Q2) have walked the FY26 margin guide down 100bps from the original ceiling. The Q2 actual of 33.9% sits 110bps below the new point estimate, so the back half must snap back — but with no further coffee pricing actions contemplated and elasticity running favorable, the bridge is at least articulated.