How carrots helped ruin Campbell Soup results
Shares in Campbell Soup Co. fell more than 6 percent Friday after the Camden food company reported a sales decline for the quarter ended May 1.
Shares in Campbell Soup Co. fell more than 6 percent Friday after the Camden-based food company reported a sales decline for the quarter ended May 1.
Campbell blamed cautious consumer spending, weak soup sales from a mild winter, soft results for V-8 juices, and cold, rainy weather in California that disrupted the fresh carrot supply in its Bolthouse Farms division.
The carrot problem at Bolthouse, which sells juices, carrot concentrate, and fresh carrots, accounted for $14 million in lost sales in the quarter, Campbell chief financial officer Anthony DiSilvestro told analysts.
That amounted to nearly half of the $30 million, or 2 percent, drop in Campbell's third-quarter revenue to $1.87 billion, from $1.9 billion a year ago.
Sales in Campbell's traditional U.S. soup business fell 5 percent, led by a 13 percent decline in ready-to-serve soups, such as the Chunky brand. Condensed soups were down 4 percent, while Swanson broth sales were up 10 percent.
Jonathan Feeney, who follows Campbell at Athlos Research L.L.C., in Radnor, calculated that soup consumption has fallen about 6.5 percent over the last two cold seasons.
Feeney said that could complicate Campbell's plans to use soup profits to expand outside supermarkets' center aisles, where food companies are being hammered by slow growth.
Among the positives highlighted by chief executive Denise Morrison were strong sales in Plum Organics, a baby food brand Campbell bought for $249 million in 2013. The relatively new soup lines, Slow Kettle and Campbell Organic, also did well.
But Kelsen, a cookie business Campbell bought in 2013 for $331 million as a platform for growth, had a difficult quarter in China. "We experienced short-term distribution challenges" and strong competition, Morrison said.
Campbell's most recent acquisition, Garden Fresh Gourmet, a Michigan producer of refrigerated salsa and other products, is still being integrated into Bolthouse Farms.
Despite the disappointing quarter, Campbell, helped by a three-year cost-cutting effort, raised a core operating earnings target for the fiscal year by 1 percentage point.
Campbell shares, which closed at an all-time high of $66.50 on May 12, closed Friday at $59.90, down $4.08, on the New York Stock Exchange.
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