- Campbell Soup's sales during its fourth quarter declined 1% compared to a year ago to $1.66 billion, below the $1.69 billion expected by analysts polled by Thomson Reuters. It marked the 11th consecutive quarter that the figure has declined for the iconic soup maker, according to MarketWatch. Sales for the full year fell 1% percent to $7.89 billion due to a 1% decline in organic sales, reflecting lower volume and higher promotional spending.
- The company warned of a difficult 2018, forecasting full-year sales in its coming fiscal year to be flat to down 2% and adjusted profit of $3.04 to $3.11 per share, below the $3.19 per share forecast by Wall Street, Reuters said.
- “The operating environment for the packaged foods industry remains challenging due to shifting demographics, changing consumer preferences for food, the adoption of new shopping behaviors and the dynamic retailer landscape," Denise Morrison, Campbell’s president and CEO, said in a statement. "In these times, sales growth remains a challenge."
Despite taking a more aggressive approach to addressing changing consumer tastes and preferences than its competitors, it appears this pace may not be quick enough for Campbell — a factor evident in the slew of challenges outlined by Morrison.
Barclays in a report questioned whether the company will be able to spend enough to boost its falling sales.
“With another weak (-2% to flat) organic sales expectation on tap, we wonder whether this provides enough cushion for proper reinvestment levels to revive sales growth (sort of like our thoughts on recent full-year guidance from” General Mills and J.M. Smucker, Barclays said.
A growing number of consumers are moving away from traditional packaged center-store products in favor of fresh and organic items and those with a slimmed-down roster of recognizable ingredients. More shoppers also are going online to buy their groceries, a factor many expect to be expedited by the recently completed Amazon-Whole Foods merger. Another large group is loading up their carts with cheaper private label brands.
Campbell's has aggressively overhauled its product mix in recent years by reformulating its existing line and spending hundreds of millions of dollars to acquire companies to help position it as a go-to marketplace for consumers interested in knowing more about their food and where it comes from.
During the last five years, it acquired Bolthouse Farms, a maker of carrots, smoothies, juices and dressings; children’s food and snack company Plum Organics; and Garden Fresh Gourmet. In July, the company extended its push when it announced a $700 million deal to purchase natural and organic brand Pacific Foods of Oregon.
The Fresh division, which is responsible for about 13% of Campbell's overall sales, posted a 1% increase during its fourth quarter to $225 million, compared to the same time last year. This was driven primarily by higher sales of Garden Fresh Gourmet, carrots and carrot ingredients. Sales of Bolthouse Farms refrigerated beverages declined slightly, reflecting supply constraints. Compared to the same time last year, operating earnings in the division for the quarter decreased from $8 million to a loss of $8 million.
"While Campbell Fresh sales increased slightly and the bottom line was disappointing, we expect to return to profitable growth going forward," Morrison said. "Our new Campbell Fresh leadership team has taken steps to enhance our quality processes and address capacity constraints toward our objective of returning the division to growth.”
Looking ahead to its 2018 fiscal year, Morrison said the company expects "the operating environment to remain difficult." She said Campbell is positioning itself for long-term growth by managing costs and reinvesting those savings in areas important to the company including real food, digital and e-commerce, health and well-being, and snacking.
Despite the challenges, Campbell executives told Food Dive last month that it's too early to write the company and its peers off. "I have seen the pundits predict the demise of our industry several times before in the past, when different channels started to emerge," said Mark Alexander, who oversees the division that includes the company's U.S. retail operation. "If we have great products, super relevant brands and very strong consumer connections, we'll do just fine. If someone is writing us off, they're writing us off very prematurely."