Campbell Soup is struggling to transform into a company known for fresher foods like carrots and refrigerated juices as its flagship canned soup business declines.
The maker of Pepperidge Farm snacks and V8 juices said Friday that sales fell for the quarter ending April 30, including a 6 percent drop in its recently formed "Campbell Fresh" unit. Campbell blamed the drop in the fresh unit on ongoing production issues stemming from a recall of some of its Bolthouse Farm beverages last year, and said it expects to be back to full production by its next fiscal year.
CEO Denise Morrison stood by the packaged fresh food unit's long-term growth potential, noting the new leadership installed earlier this year and plans to start selling a plant-based milk next year. Still, she acknowledged that the refrigerated drinks industry is "very competitive", with other new products coming into the market. The unit's carrot sales have also recently suffered, with the company blaming undersized carrots for its disappointing performance. It has also retooled efforts to sell more profitable products, such as "Shake Downs" bagged carrots that come with seasonings that can be sprinkled on.
On Friday, Morrison said the company has shifted from trying to sell Shake Downs in retailers like supermarkets to offering them in school systems.
Meanwhile, Campbell's flagship unit that houses its U.S. soup and sauces business continued to suffer as well, with sales down 2 percent in the quarter. The company noted that its broth business has been pressured by private-label alternatives, which have grown market share in the overall soup category. Morrison also underscored the pressure in the broader packaged food industry, with online grocers and discounters posing greater competition to traditional grocers and big-box retailers. And she noted that products in the center aisles of supermarkets, which are seen as being less fresh, are being especially challenged.
However, the company's global biscuits and snacks unit benefited from higher sales of Goldfish crackers - sales in that unit rose 2 percent for the quarter.
For its fiscal third quarter, Campbell earned $176 million, or 58 cents per share. Excluding one-time items, it earned 59 cents per share, falling short of the 64 cents per share Wall Street analysts expected, according to Zacks Investment Research.
Total revenue was $1.85 billion, also falling short of forecasts for $1.87 billion.
Campbell said it now expects sales for its fiscal 2017 to be flat to down 1 percent. It previously forecast sales to be flat to up 1 percent. It expects full-year earnings in the range of $3.04 to $3.09 per share.
Campbell Soup Co. stock fell nearly 2 percent to $55.81 in mid-morning trading. Campbell shares have decreased nearly 6 percent since the beginning of the year, while the Standard & Poor's 500 index has risen almost 6 percent. The stock has dropped 10 percent in the last 12 months.
Elements of this story were generated by Automated Insights using data from Zacks Investment Research. Access a Zacks stock report on CPB at https://www.zacks.com/ap/CPB
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