Foodservice

Campbell Soup beats on fiscal Q3 EPS, raises estimates amid strong COVID-19 demand

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June 3, 2020

Campbell Soup Co. reported a better than expected performance during the fiscal third quarter, as COVID-19 drove strong demand for its food staples, including soups, meals, beverages and snacks.  The firm also raised sales and earnings estimates for fiscal 2020, citing strong continued demand.

The company reported adjusted earnings of 83 cents a share in the quarter, well ahead of consensus estimates. Earnings from continuing operations rose 34% to 55 cents a share.

The company reported a 15% increase in sales to $2.24 billion in the fiscal third quarter, ended April 28, according to the report. Organic sales, which exclude the impact from the divested European chips business, increased 17% from the prior year driven by favorable volume in both the meals and beverages and snacks segments, reflecting increased demand for at-home food consumption with the stay-at-home mandate.

Gross margin increased from 33.5% to 34.5% ($4 million). Excluding items impacting comparability, adjusted gross margin increased 100 basis points to 34.7% driven by favorable product mix and improved operating leverage, as well as the benefits from supply chain productivity improvements and cost savings initiatives, offset partly by cost inflation and other supply chain costs, including mark-to-market losses on outstanding commodity hedges, driven primarily by diesel hedges, and costs related to COVID-19.

For the nine month period, net sales increased 4% over the prior year's first quarter to $6.58 million, while organic sales increased 5% over the prior year's nine month period.

As a result of the performance in the third quarter, which was significantly impacted by the increase in demand for products amidst the COVID-19 pandemic, and the current outlook for continued demand for our products, the company is raising its fiscal 2020 outlook for net sales, adjusted EBITDA and adjusted EPS. Although the effect of the COVID-19 pandemic on our sales, adjusted EBIT and adjusted EPS cannot be predicted with certainty.

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