TOFUTTI BRANDS INC (TOFB)·Q2 2025 Earnings Summary

Executive Summary

• Net sales were $2.03M, down 11% year over year, but improved sequentially from $1.59M in Q1; gross margin was 30% vs 29% YoY, and the company posted a near breakeven net loss of $7k ($0.00 per share) .
• Management cited two primary headwinds: increased competition in vegan cheese and tariff uncertainty that caused two largest domestic customers to pause some regular purchases .
• Pricing actions at the end of 2024 are flowing through: first-half gross margin rose to 33% from 25% YoY, despite lower volume .
• No formal guidance was provided; Wall Street coverage appears minimal with no published S&P Global consensus for EPS or revenue in Q2, limiting “beat/miss” framing (see Estimates Context; values retrieved from S&P Global)*.
• Strategic update: partnership with Greens and Grains to co-develop a food‑service-sized tzatziki using Tofutti’s Better Than Sour Cream, expanding presence in vegan foodservice and supporting category relevance .

What Went Well and What Went Wrong

What Went Well

• Gross margin improved YoY to 30% in Q2 (29% prior-year), aided by late-2024 price increases; 1H gross margin increased to 33% vs 25% last year .
• Operating cost discipline: Q2 operating expenses fell to $625k from $693k in Q2 2024, helping narrow operating loss to $7k vs $26k last year .
• Management is proactively developing channels and products (e.g., Greens and Grains tzatziki collaboration) to drive usage and brand exposure in foodservice .

Quote: “Our gross profit percentage was 33% for the twenty-six weeks ending June 28, 2025 compared to 25% for the twenty-six weeks ending June 29, 2024,” driven by “significant price increases we implemented at the end of 2024.”

What Went Wrong

• Volume pressure persisted: Q2 net sales declined 11% YoY; vegan cheese sales fell to $1.71M from $1.93M and frozen desserts declined to $321k from $357k .
• Demand uncertainty tied to proposed tariffs led two largest domestic customers to pause some regular purchase plans, constraining near-term sell-in .
• Competitive intensity in vegan cheese remains a structural headwind, as management explicitly points to increased competition as a key reason for lower sales .

Financial Results

Segment breakdown (Q2):

KPIs and Balance Sheet Highlights:

Guidance Changes

Earnings Call Themes & Trends

Note: No earnings call transcript found for Q2 2025; themes sourced from company filings and press releases .

Management Commentary

• “Sales of our vegan cheese products decreased… due to increased competition in the vegan cheese category.”
• “Our sales were also negatively impacted by the proposed new tariffs… The uncertainty created by the tariffs caused our two largest domestic customers to pause some of their regular purchase plans.”
• “Our gross profit percentage was 33% for the twenty-six weeks ending June 28, 2025 compared to 25% for the twenty-six weeks ending June 29, 2024,” principally due to “significant price increases we implemented at the end of 2024.”
• On product collaboration: “Greens and Grains is a respected and fast-growing vegan brand… This partnership aligns perfectly with one of our core markets—vegans and vegetarians.” — Steven Kass, Chief Executive and Financial Officer

Q&A Highlights

No Q2 2025 earnings call transcript was available; therefore, there are no Q&A themes to report for this quarter .

Estimates Context

*Values retrieved from S&P Global.

Implications: Absent formal consensus, investor expectations hinge on volume trajectory (customer ordering normalizing post-tariff uncertainty) and margin durability from 2024 pricing .

Key Takeaways for Investors

• Sequential revenue recovery (+$438k QoQ) with breakeven-level net income suggests operating leverage if sell-in normalizes; watch customer ordering post-tariff clarity .
• Pricing discipline is working: 1H gross margin at 33% vs 25% YoY; sustaining mix/pricing while protecting share in vegan cheese is critical .
• Competitive pressure in vegan cheese is the primary headwind; monitor category-share actions and retailer resets heading into 2H/holiday .
• Foodservice collaboration (Greens and Grains) offers incremental channel diversification—evaluate potential for broader foodservice SKUs and branded dips to drive volume .
• Liquidity is tight but stable; cash ~$0.35M and working capital ~$2.73M; no borrowings—inventory/AR management will be key if demand timing remains choppy .
• With no guidance or consensus, trading may be headline/macro-driven (tariff policy, category competition); focus on monthly order cadence and margin sustainability .
• Near-term: constructive on margins; medium-term: trajectory depends on resolving tariff uncertainty and offsetting competition via product innovation and channel partnerships .

Additional Source Documents Used:

• Q2 2025 8-K and press release (Item 2.02; Exhibit 99.1) .
• Q1 2025 press release .
• Collaboration press release (Greens and Grains) .
• Q3 2025 press release for trend context .