While packaged food brands across categories are reporting a difficult year-over-year comparison, with sales falling below pandemic-driven panic buying highs, Campbell Soup Company has been especially hard hit. The company’s third-quarter earnings on Wednesday (June 9) came in below consensus estimates, sending stock for a dive. Share prices when the market opened Wednesday (June 9) were down 8.5 percent from the previous day’s close, $44.95 down from $49.12.
Addressing the worse-than-expected performance, Campbell Soup Company President and Chief Executive Officer Mark Clouse said in a statement. “We are taking appropriate actions, including putting pricing in place for the next fiscal year.”
The company’s net sales fell 11 percent, adjusted EBIT decreased 27 percent to $283 million, and adjusted earnings per share fell 31 percent to $0.57. The company also adjusted its full-year guidance to reflect this underperformance.
“While we recognized the third quarter would be a challenging net sales comparison to the demand surge at the onset of the COVID-19 pandemic a year ago, we faced additional headwinds,” said Clouse. “Our results were impacted by a rising inflationary environment, short-term increases in supply chain costs, and some executional pressures as we continued to advance our transformation agenda, primarily in our Snacks division.”
The company announced plans back in January to close down its snacks manufacturing plant in Columbus, Georgia by Spring 2022, saying it was a “very difficult decision.” This difficulty in the snacks category is especially notable now, as competitors note continued strength in the snacks category. PepsiCo-owned Frito-Lay, for instance, recently reported that online snack sales had increased about 73 percent year over year and that grocery store snack purchasing is up 14 points from 2020. Campbell Soup’s snack portfolio includes Pepperidge Farm products — think Goldfish, Milanos and Pirouettes, among others — as well as multiple popular potato chip, cracker and pretzel brands.
Campbell Soup Executive Vice President and Chief Financial Officer Mick Beekhuizen said on a call with analysts that “about half of the gross margin decline” came from “headwinds related to our transition into the post COVID-19 operating environment.”
Of all the headwinds that impacted the company’s performance during the quarter, Clouse said that the company is “confident that these are all addressable.” He noted, “Our confidence is further strengthened by the … health of our brands. Nearly three-quarters of our portfolio gained or held share in the quarter, with most of our core categories having grown at higher rates than pre-pandemic levels.”
At the start of the pandemic, Campbell Soup sales soared, with consumers stocking up on canned foods, ready to go into lockdown. Many of the company’s canned foods continued to gain or hold share during the quarter ending May 2, 2021. The company gained 2 points in share of U.S. soup, reports a presentation shared with analysts, and its Prego sauce brand held its place as number one in its category, marking two years of holding the top spot.