USA – Labour and supply chain constraints impacted Campbell Soup’s second-quarter performance leading to the American processed food and snack company to results that were below expectations.
Net sales for the quarter ended 30 January dropped 3% to US$2.21 billion from US$2.28 billion a year prior.
Net earnings for the Camden, New Jersey-based Campbell stood at US$212 million even as its gross margin decreased to 30.3% from 34.4% last year.
Excluding items impacting comparability, adjusted EBIT decreased 17% compared to the prior year to US$318 million.
Campbell attributed the decline to sales volume declines and lower adjusted gross margin performance, partially offset by lower marketing and selling expenses.
In the three months ended 30 January, net sales in the company’s meals & beverages unit declined by 3% to US$1.28 billion.
Sales for US soup decreased 1%, due to reductions in condensed soups, partially offset by gains in ready-to-serve soups and broth.
Sales for Campbell’s snacks unit decreased 3% to US$934 million, while sales of power brands were up by 1%.
The decrease was due to declines in non-core businesses and in certain salty snacks, such as Late July snacks. These were partially offset by gains in Goldfish crackers.
Meanwhile, half year net sales decreased 4% to US$4.45 billion. Organic net sales, which exclude the impact from the sale of the Plum baby food and snacks business, decreased 3%.
The drop in sales was driven by volume declines primarily due to supply constraints, partly offset by favorable price and sales allowances.
Excluding items impacting comparability, adjusted EBIT decreased 16% compared to the prior year to US$707 million, reflecting sales volume declines, lower adjusted gross margin performance and lower adjusted other income, partially offset by lower marketing and selling expenses.
Despite a slow start in the year, Campbell – known for Swanson broth, and Pepperidge Farm cookies – is upbeat about the remainder of the year.
Campbell Chief Executive Mark Clouse predicts that margins would recover through the rest of the year on improved staffing including 3,500 new workers in the last seven months.
“We now see absenteeism and vacancy rates trending back to normal levels. This is translating to more production and the beginning of a return to normal distribution and inventory levels,” he said.
The company has maintained its full year adjusted earnings forecast of between US$2.75 and US$2.85 per share, saying the guidance reflects expected continued strong demand for the balance of the year with steady supply recovery and improved service levels.
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