Campbell Soup topped market expectations for quarterly sales and profit and stuck to its annual forecasts, helped by steady demand for branded ready-to-eat meals, snacks and canned soups.
Prices across Campbell's products rose 1% while overall volumes dipped 2% during the reported quarter, as holiday promotions encouraged shoppers to indulge in its Goldfish crackers and Pepperidge Farm cookies.
The pace of price increases has slowed from last year's mid-double-digit rise, as most food companies try to limit pricing to cope with subdued demand.
Packaged foods peers Kraft Heinz, Mondelēz, McCormick, Hershey and PepsiCo have all flagged softer volume growth in their latest quarterly results.
Still, benefits from prior price hikes and easing supply chains helped Campbell's gross profit margin climb 31.6%, from last year’s 30.5%.
Quarterly Highlights
Net sales in its meals and beverages segment – Campbell's biggest revenue churner – declined 2%, owing to weaker demand for retail products in the US, including ready-to-serve and condensed soups as well as Pace Mexican sauces.
Sales in the snacks division were flat in the quarter.
The company, which is set to close its buyout of Rao's sauce maker Sovos Brands next week, posted second-quarter net sales of $2.5 billion (€2.29 billion), compared with analysts' average estimate of $2.44 billion (€2.24 billion), according to LSEG data.
It logged adjusted earnings of 80 cents per share, better than the 77 cents analysts were expecting.
The New Jersey-based firm reaffirmed its fiscal-year 2024 target for net sales and earnings for the second time in a row.
“We once again delivered on our commitments, with a sequential improvement in volume trends and year-over-year operating margin expansion in both our meals and beverages and snacks divisions,” Campbell's president and CEO, Mark Clouse, said in a statement.
“We are excited about the anticipated completion of the acquisition of Sovos Brands which will bring incremental growth to our meals and beverages division and continue the transformation of our highly advantaged portfolio.”
News by Reuters, additional reporting by ESM.
