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Its soup may be Mmm Mmm Good, but Americans' shift toward fresh foods is kicking Campbell's right in the can.
The company said on Tuesday its quarterly profit fell 30 percent as U.S. sales of soups and V8 beverage declined. A recall of its recently acquired Plum Organics products also hurt results and the company cut its outlook for the year.
Shares of Campbell Soup fell 6 percent to $39.28 after the results were announced.
Campbell's, based in Camden, N.J., has been trying to reshape its image as a purveyor of shelf-stable canned and other packaged products that are sold in the center aisles of supermarkets. The push comes as people increasingly reach for foods they feel are fresh, migrating toward the perimeters of grocery stores where produce, meats and dairy are sold.
To better connect with the under-30's millennial generation, who tend to shun canned products, Campbell introduced soups in bright, new plastic pouches and dinner sauces in black packages meant to conjure the blackboard menus at cafes. But the company is still facing competition from the growing prepared foods sections in supermarkets and other outlets that offer fresh, hot soups.
In a call with analysts, Chief Financial Officer Craig Owens declined to specify what percentage of it soup sales come from such new products. "It's still pretty small. It's not a very significant portion of our soup sales," he said.
Chief Executive Denise Morrison also cited the "proliferation of specialty beverages and packaged fresh juices" for putting its V8 beverage category under pressure. Like its soups, V8 drinks are shelf-stable and don't have to be refrigerated until they are opened. Morrison said she doesn't expect the beverages to be a growth driver this year.
As the company works to refresh its core offerings, Morrison is also working to expand into new areas. Its recent acquisitions of Bolthouse Farms juices and Plum Organics baby food were intended to give the company a foothold in the faster-growing category known as "fresh packaged goods." But Campbell has already stumbled and this month recalled some Plum Organics products because they were spoiling unexpectedly.
For the quarter, U.S. soup sales declined 6 percent as retailers adjusted inventories and beverages fell 8 percent. The company noted that the later Thanksgiving this year hurt results, with some shipments being pushed off to the current quarter.
Sales for the global baking and snack division increased 6 percent. Campbell, which also makes Pepperidge Farm, said it plans a national launch of Goldfish-branded macaroni and cheese this quarter.
Campbell Soup now expects adjusted 2014 earnings to increase between 2 percent and 4 percent, or $2.53 to $2.58 per share. Revenue is forecast to rise by 4 percent to 5 percent. Its prior guidance called for adjusted earnings growth of 3 percent to 5 percent.