Vending

Campbell Soup boosts earnings on sales decline for Q4, FY 2021

Image courtesy of the Campbell Soup Co.

September 1, 2021

The Campbell Soup Co. managed to improve earnings for Q4 and FY 2021 despite declining sales, according to an earnings release.

Net sales decreased 11% from $2.1 billion in Q4, 2020 to $1.87 billion in the quarter ending Aug. 1, 2021.

Organic net sales, which exclude the impact from the additional week and the impact from the sale of the Plum baby food and snacks business, decreased 4% versus the prior year, which was above the company's expectations, but increased 9% versus the comparable fiscal 2019 period.

The decline versus the prior year was driven by a 5% decrease in volume and mix primarily as a result of cycling both the elevated demand in food purchases for at-home consumption and the partial retailer inventory recovery in the prior year. Lower promotional spending and favorable price and sales allowances each contributed a 1% increase to net sales versus the year-ago period.

Diluted earnings per share jumped 239% from 28 cents to 95 in the comparative quarters, while adjusted EPS decreased 13% from 63 cents to 55 cents, of which approximately 4 cents reflected the additional week in fiscal 2020.

For the full year, net sales decreased 2% from $8.7 billion in 2020 to $8.5 billion and organic net sales were comparable for the two years.

Full year EPS rose 40% from $1,107 to $1,545 while adjusted EPS fell 3% from $1,449 to $1,406.

Net sales in both meals and beverages and snacks each declined 2% versus the prior year. Organic net sales, which exclude the impact from the additional week, divestitures and the impact of currency, were comparable to the prior year and increased 6% compared to fiscal 2019.

In fiscal 2021, meals and beverages organic net sales decreased 1% compared to the prior year, driven by declines in foodservice, partially offset by growth in V8 beverages.

In snacks, organic net sales were flat as gains in the salty snacks portfolio, including Late July snacks and Snack Factory Pretzel Crisps, and in Goldfish crackers were offset by declines in Lance sandwich crackers and in partner brands within the Snyder's-Lance portfolio.

The $1.87 billion in quarterly revenue beat analyst expectations by $60 million, according to Seeking Alpha, while the non-GAAP EPS of 55 cents beat expectations by 8 cents and the GAAP EPS of 95 cents beat expectations by 55 cents.

Shares traded today at $41.73 against a 52-week range of $40.05-$52.77.

"The fourth quarter was a positive finish to a solid year during which we successfully navigated a difficult environment, made significant progress advancing our strategic plan and addressed the executional pressures we experienced in the third quarter," Mark Clouse, president, said in the release. "Our growth in adjusted EPS during fiscal 2021 on comparable organic sales, coupled with our expanded share growth across the majority of our core categories, demonstrated strong performance especially when compared to the significant growth in the prior year."

The company expects the first quarter to be the most challenging as it continues to cycle the elevated sales and scale efficiency from a year ago, while pricing actions begin to take hold. First half margins will continue to be impacted by transitional headwinds, with comparisons easing and sequential improvement in the second half of the fiscal year versus a year ago.

The company expects core inflation of high single digits for the year with a more pronounced impact in the second half which will partially mitigate the second half recovery. The company expects to manage these inflationary headwinds with positive net price realization, supply chain productivity improvements and cost savings initiatives.