Dive Brief:
- Campbell reported a 6.5% decline in fourth-quarter adjusted earnings Thursday, which fell to $143 million, or $0.46 per share, from $153 million, or $0.49 per share, in the same period last year.
- Unadjusted earnings came in at a net loss of $81 million, or 26 cents per share, which the company attributed to "a pre-tax non-cash impairment charge of $141 million to reduce the carrying value of the intangible assets of the Bolthouse Farms carrot and carrot ingredients business," Reuters reported.
- Revenue dipped 0.35% to $1.69 billion for the quarter, while full-year as reported and organic sales decreased 1%.
Dive Insight:
Campbell president and CEO Denise Morrison described the performance of its Fresh segment, which includes Bolthouse Farms products and refrigerated soups, as "disappointing" in a statement. She reaffirmed the company's confidence in the segment's strategy and potential to deliver long-term growth.
Declines in sales of carrots and carrot ingredients under the company's Bolthouse Farms brand and a voluntary recall of Bolthouse Farms Protein PLUS drinks in June factored into the quarter's revenue results. The recall and higher carrot costs also contributed to a slimmer gross margin for the quarter, which decreased from 33.2% to 32.4%.
Campbell's dips in revenue were less than recent earnings reports from center store competitors. General Mills reported a 9% sales decline for the fourth quarter and 6% decrease for the year, and Kraft Heinz posted a 4.7% decline in pro forma net revenue for the most recent quarter.
Still, the underwhelming performance from the Fresh segment could be concerning for Campbell as it continues to align with consumer demands for healthy, natural and fresher foods. Almost two-thirds (64%) of consumers said they are trying to buy healthier food, according to a Nielsen survey released in June.
Value-added vegetables recorded a 15% CAGR from 2011 to 2015, so the growth potential remains. But if Campbell itself isn't seeing comparable sales growth for brands in that segment, that could signal other challenges.
Consumers, particularly millennials, are less trusting of major food companies. Campbell has worked to overcome that barrier by being a leader for transparency among major food companies. including labeling GMO ingredients in its products, being an early adopter for SmartLabel and committing to removing BPA from its packaging.