Dive Brief:
- Campbell Soup reported a 2.3% dip in sales to $2.203 billion, missing analysts' expectations of $2.207 billion. Quarterly profit at $0.95 per share, however, went well beyond Wall Street estimates of $0.76 per share.
- The company's segments saw mixed results, with snacks and soup and simple meals falling in sales while the healthier foods segment is on the rise.
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Campbell increased its adjusted profit forecast for full-year 2016 to $2.75 to $2.83 per share.
Dive Insight:
Though Campbell is struggling overall with sales growth, the company's healthy foods segment is still on the rise, with Campbell Fresh having reported a sales increase of 8% to $249 million. Americas Simple Meals and Beverages saw a 2% decrease in sales to $1.30 billion, while sales for the biscuits and snacks segment fell 6% to $652 million.
These numbers mirror the trend of consumers turning away from processed foods and choosing fresher foods with simpler labels devoid of artificial ingredients. The company has turned to efforts like zero-based budgeting to aid its bottom line. Campbell announced earlier this month that it would be removing several artificial ingredients from 2 of its children's products.
This followed a July announcement that the company would simplify its recipes in general and remove artificial ingredients by the end of 2018. However, these moves have not yet paid off as sales continue to decline in those segments. The company is also looking to $250 million in savings each year by fiscal 2018's close.
Campbell has launched a strong marketing effort, which includes soup featuring a "Star Wars" theme to capitalize on the buzz from the upcoming movie as well as "real" families in different scenarios buying Campbell's branded products. In July, Campbell also announced that it would boost the digital spending portion of its advertising budget from about 20% to 40% in 2016 and cut back TV spending to 50%.