Dive Brief:
- Campbell reported third-quarter earnings Friday, including a 2% decrease in reported and organic sales to $1.87 billion, though that figure just beat analysts' predictions.
- "Disappointed" with the results, CEO Denise Morrison attributed the slowdown to a weak performance in the U.S. soup segment (5% revenue decline) and the impact of disruption to its carrot supply for the V8 beverages brand. "We understand the factors affecting our top line performance and are addressing them," Morrison said in a statement.
- As reported earnings before interest and taxes (EBIT) fell 6%, while as reported EPS of $0.59 ($185 million in profit) increased 4% for the quarter. Campbell raised its expected full-year outlook for both.
Dive Insight:
Campbell Fresh was one bright spot in an otherwise decline in revenues across the board with a 6% sales increase. But the Garden Fresh acquisition accounted for 10% of growth, which means organic sales in the category declined 4%. This too was largely impacted by the availability of carrots, but was offset partially by gains in Bolthouse Farms premium refrigerated beverages and salad dressings.
Campbell Fresh will be a critical segment for the company going forward, as much of the rest of its primarily processed foods-based portfolio has declined. Expanding its presence along the perimeter of the grocery store enables Campbell to stay relevant. Its new venture arm, Acre Venture Partners, will play a major role in identifying startups that could be potential additions to Campbell Fresh in the future.
But Campbell has yet to give up on its center store brands and has aligned itself with consumer trends like simpler, natural ingredients and increased transparency. Campbell was the first major manufacturer to commit to GMO labeling across its portfolio before other brands, and it also recently announced it would remove BPA from its packaging.
Being a leader in industry transparency is key for Campbell, as other strategies have not yet panned out. Despite various health-based initiatives, Campbell's sales have not rebounded, and the company's attempt at increased convenience for Campbell's soup via single-serve K-Cups also disappointed. That led to Campbell discontinuing the K-Cup line last month.