Shares fall as Campbell Soup projects weak fiscal 2018 sales

Shares in Campbell Soup Co. fell sharply on the New York Stock Exchange on Thursday after the Camden company predicted that revenue in the fiscal year that ends in summer 2018 would be down as much as 2 percent, and flat at best, compared with the fiscal year just ended.

That would be Campbell's fourth year in a row of declining revenue, as it struggles to regain traction in a rapidly changing consumer and retail environment.

"The retailer environment right now is hypercompetitive," Campbell's chief executive, Denise Morrison, told analysts, mentioning Amazon's acquisition of Whole Foods and the expansion of discount chains Lidl and Aldi.

At the close of trading Thursday, the stock was at $46.20, down $4.05, or 8.06 percent. The shares' all-time high was $67.89 in July 2016.

One big problem for Campbell is that it failed to reach a deal on soup promotions with a major retailer for the forthcoming cool-weather season, Morrison said. Campbell did not identify the retailer, or provide many details, despite repeated questions by analysts. The impact on revenue is expected to be 1 percent of total company sales, or nearly $79 million.

Campbell's total revenue for the 12 months ended July 30 was $7.89 billion, down close to 1 percent from $7.96 billion in the comparable period a year before. Adjusted operating earnings climbed 2 percent, to $1.49 billion from $1.47 billion.

David Driscoll, a veteran food-industry analyst with Citigroup, called the fiscal 2018 revenue forecast "pretty disappointing," especially after getting the impression that the company was optimistic at its annual meeting with analysts last month in Camden. "I just feel like we're getting a bit more negative of a figure today, and maybe it's not only related to the soup issue," he said.

But Anthony DiSilvestro, Campbell's chief financial officer, said U.S. soup and V8 beverages were the company's key areas of weakness.

More broadly, amid widespread weakness in revenue growth at food giants, Barclays Capital analyst Andrew Lazar wondered aloud during the conference call whether Campbell should not be spending more on potential growth areas, "even if it means, let's say, lower [earnings per share] for a year or two in order to revive the top line maybe more sustainably."

Morrison said Campbell had been "acting very decisively and aggressively" in recent years. She said she's comfortable that the company has made the right level of investment.