Food company Campbell’s fell below estimates last quarter as snack sales dropped, sending its shares down 7.1%.
Net sales declined 5% year-over-year to US$2.56 billion in the quarter to 1 February, 1.63% below Zacks consensus estimates. Earnings per share were $0.51, down from $0.74 one year ago and missing estimates of $0.57.
“Our core Meals & Beverages portfolio delivered in-market consumption growth in the second quarter, highlighted by the Rao’s brand surpassing $1 billion in trailing twelve-month net sales. Overall results, however, fell short of our expectations due to weaker-than-expected performance in Snacks and storm-related shipment disruptions,” said Campbell’s CEO Mick Beekhuizen.
“To stabilise Snacks, we are taking decisive action, focused on sharpening our value, new product innovation and in-market execution. We are also accelerating cost saving initiatives to mitigate cost headwinds and support continued investment in our brands.”
Meals & Beverages sales were $1.65 billion, falling from $1.68 billion one year ago. Snack sales dropped to $914 million, from $1.01 billion.
The decrease in snack sales was largely driven by declining chips and pretzels sales, as well as supply constraints, the company said.
Adjusted EBIT was down 24% to $282 million. Gross profit dropped from $819 million to $717 million.
The company has also lowered its full-year outlook. It expects adjusted EBIT to fall by 17-20%, compared with previous guidance of a 9-13% drop, and projects earnings per share will decline by 23-26%.
Campbell’s (NASDAQ: CPB) shares closed 7.1% lower at $22.94, but rose 0.4% in after-hours trading. Its market capitalisation is $6.84 billion.
