Campbell (CPB) revealed on Friday its fiscal second-quarter profits slipped 7.7% amid sinking sales, prompting the company to downgrade its financial guidance.

The Camden, N.J.-based soup maker said it earned $239 million, or 71 cents a share, last quarter, compared with a profit of $259 million, or 74 cents a share, a year earlier. Revenue fell 1.2% to $2.13 billion.

Campbell’s results largely met Wall Street’s expectations as analysts had called for EPS of 71 cents on $2.15 billion. The company was hurt by a 4% fall in soup sales. Gross margins shrank to 39.4%, down from 40.5% a year earlier.

“The overall competitive environment remains challenging throughout the food industry, particularly in the U.S.,” CEO Douglas Conant said in a statement. “We expect that improved price realization will lead to better profitability and strengthen our financial position in anticipation of higher cost inflation going forward.”

Looking ahead, Campbell now sees EPS declining 1% to 3% in the full year, compared with a November forecast for a rise of 2% to 4%. The company also forecasted sales will increase up to 1% for the full year, down from up to 3% earlier.

Shareholders punished the Campbell for the results and lowered guidance, driving its stock down 4.4% to $33.39. The stock had been flat on the year as of Thursday’s close.

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