Campbell Soup sticks to full-year forecast, shares fall
Reuters
Published Jun 07, 2023 09:12AM ET
Updated Jun 07, 2023 02:16PM ET
By Ananya Mariam Rajesh
(Reuters) -Campbell Soup shares dropped as much as 9% on Wednesday, after the company disappointed investors by maintaining its full-year forecasts for sales and profit despite beating quarterly earnings.
Packaged food companies such as Campbell, Kraft Heinz (NASDAQ:KHC) and Kellogg (NYSE:K) Co have been raising prices to counter the impact of higher input costs stemming from supply chain snags and the Russia-Ukraine war.
The move helped Campbell Soup (NYSE:CPB) post a 5% rise in quarterly sales, although its margins slipped to 30% from 31.2%.
Investors are likely disappointed with the company keeping its forecast unchanged as they were anticipating a raise, said CFRA Research analyst Arun Sundaram, but added that the decision reflected a "prudent level of conservatism."
Campbell expects annual net sales to grow between 8.5% and 10%, compared with analysts' estimates for a rise of 9.5%, according to Refinitiv IBES data. It forecast adjusted profit of $2.95 to $3 per share, versus estimates of $3.01.
Its average selling price rose 12% in the quarter, but a 7% decline in total volumes signaled that Americans, pressured by rising food prices, were moving away to private-label products that are more affordable.
"While we do foresee an improvement in volumes in the future, we are unlikely to see meaningful growth until the pressure of price increases subsides," Sundaram said.
CEO Mark Clouse said in a post-earnings call that volumes were also impacted by retailers cutting back on rebuilding inventory compared to last year, when most of them restocked heavily to battle a shortage in products due to pandemic-driven supply chain disruptions.
Excluding one-time items, the Goldfish crackers maker earned 68 cents per share, beating estimates of 64 cents, while net sales of $2.23 billion was in line with expectations.
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Written By: Reuters
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