California-based avocado company Calavo Growers reported a net loss in its financial year amid heavy saturation of the market and the ongoing closures of foodservice outlets due to the Covid-19 pandemic.

The organization recorded total revenue for the fourth quarter period ended Oct. 31 at US$234.4 million compared to US$292.2 million for the fourth quarter of last year, representing a 20 percent decrease.

This brought total revenue for the fiscal year to US$1.1 billion, an 11% decrease year-over-year.

Gross profit for the fourth quarter was US$21.2 million, or 9.0% of revenue, compared to US$24.6 million, or 8.4% of revenue for the same period last year. For the fiscal year, it was US$89.9 million compared to US$128.1m for the 2019 fiscal year. 

A net loss of US$13.6 million was reported for the fiscal year, while Calavo announced a net income of US$6.2 million compared to US$5.2 million in 2019 for the fourth quarter.

“Avocado volumes increased due to rising popularity in the U.S. and abroad,” said James E. Gibson, CEO of Calavo Growers.

“Our fourth-quarter results reflect a continuation of trends from the third quarter. With strong crops out of Mexico and California, supply in the fourth quarter was plentiful, lowering the average selling price by 22% versus the year-ago quarter, when supply was very constrained.”

“Many foodservice outlets remained unavailable to absorb the crop size and quality dispersion, which has historically helped to maintain margins. As a result, revenue and gross margin declined year-over-year.”

While avocado volumes were higher, increasing 3% over the prior-year period, total revenue was impacted by the lower average selling price of avocados, lower sales volumes as a result of the closure of RFG’s Midwest co-packing partner in April and the prolonged Covid-19 pandemic.

“When excluding the impact of this [co-packing partner] closure, sales in our RFG segment rose 3% year-over-year, overcoming the impact from the pandemic,” he said.

The increase in gross profit margin percentage was attributable to improvements in the RFG and Foods business segments, partially offset by a lower gross profit margin percentage in the Fresh segment.

“As many businesses experienced, fiscal 2020 presented unprecedented challenges and our team faced them with resilience and resolve.”
“We continue to move forward implementing strategic initiatives designed to improve our long-term growth prospects,” Gibson said.