High Liner Foods (TSX:HLF) says a decision to pass on higher seafood costs down to customers left many people looking elsewhere for their fish sticks.
The Nova Scotia-based company said its sales volumes fell while revenues dropped nearly four per cent in the second quarter.
Profits were further squeezed by unfavourable foreign exchange rates.
Shares of the company fell nearly 20 per cent to close at $19.39 on Wednesday at the Toronto Stock Exchange.
"The results for the second quarter did not meet our expectations," president and chief executive Keith Decker told analysts on a conference call.
Seafood is purchased in U.S. dollars, which means recent price increases for raw materials have been even more pronounced in Canada because of the steep decline in the value of the loonie, he said.
"These price increases have had an adverse effect on sales volume in both retail and food service," Decker added, pointing to the company's two segments of business, mainly in supermarkets and quick-service restaurants.
High Liner does much of its business in Canadian dollars, but reports its financial results in U.S. dollars, which means the company takes an extra hit when the currency is converted.
Adjusted net income fell 24 per cent to $12.7 million.
Revenues dropped 3.9 per cent to US$226.3 million in the three months ended July 4, while sales volumes declined to 61.3 million pounds from 67.7 million pounds in the comparable period.
Decker said sales volumes were showing improvement in June as the company ramped up new promotions.
He also anticipates some raw materials, including haddock, which he called "a significant species" for the company, are starting to come back to more normal price levels.
"We are expecting an improvement in the pricing environment as we move into the back end of the current year," Decker said.
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David Friend, The Canadian Press