Foodservice

Campbell Soup Q1 2021 sales, earnings spike driven by COVID-19

Photo courtesy of Campbell Soup Co.

December 9, 2020

The Campbell Soup Co.'s sales increased 7% from $2.83 billion in the first quarter of 2019 to $2.34 billion for the first quarter of fiscal 2021 ending Nov. 1, 2020, driven by gains in meals, beverages and snacks, according to an earnings report. Organic net sales grew 8% driven by a 6% increase in volume and mix and a 2% increase from lower levels of promotional spending.

The volume increase reflected heightened demand as at-home food consumption remained elevated as a result of the COVID-19 pandemic as well as improved retailer soup inventories. Organic net sales exclude the impact from the sale of the European chips business in fiscal 2020.

Earnings per share of $1.02 (both adjusted and reported) beat market expectations by 20 cents, while the revenue gain for the quarter beat revenue expectations by $20 million, according to Seeking Alpha.

While earnings beat market expectations for the quarter, shares were down by 1% today on soft guidance for the second fiscal quarter, according to Seeking Alpha. Guidance for the second fiscal quarter peg a 5%-7% gain against a consensus of 6.5%, with adjusted earnings projected at 81 cents to 83 cents against a consensus of 83 cents.

Shares traded at $47.21 this morning against a 52-week range of $40.52-$53.09.

"Fiscal 2021 is off to a strong start with first-quarter sales growth across both divisions and double-digit gains in EBIT and EPS," Mark Clouser, president and CEO, said in a prepared statement. "Our meals and beverages division continued to drive impressive sales and margin growth as we positioned our brands to align with macro consumer trends, and retailers rebuilt inventory for the holidays and the heart of soup season. Snacks continued to deliver strong results while increasing capacity in key power brands. We continue to build a high-performing snacks business with differentiated brands and improving margins."

Gross margin increased from 33.8% to 34.7%. Excluding items impacting comparability in the current year, adjusted gross margin increased 100 basis points to 34.8% driven primarily by moderated promotional spending and favorable mix, offset partly by slightly higher net supply chain costs as productivity improvements and improved operating leverage were more than offset by cost inflation, other operational costs and COVID-19 related costs.

Earnings before interest and taxes increased 45% to $461 million. Excluding items impacting comparability, adjusted EBIT increased 18% to $463 million primarily due to higher sales volumes, improved gross margin performance and lower selling expenses, offset partly by increased marketing investment and higher adjusted administrative expenses.

Earnings per share from continuing operations were $1.02, marking an 82% gain over the 56 cents in the 2020 first quarter on a reported basis and a 31% gain over the 78 cents reported in 2020 first quarter on an adjusted basis.

The board of directors has approved an increase in its quarterly dividend from 35 cents per share to 37 cents per share, an increase of 6%, or $1.48 on an annualized basis. The quarterly dividend is payable Feb. 1, 2021, to shareholders of record at the close of business Jan. 9, 2021.

The impact of the continuing pandemic on the company's fiscal 2021 results is uncertain and makes it difficult to provide a full-year outlook at this time, the earnings release noted. Based on an expectation of a continued elevated demand landscape and increased investment in brands, the company expects net sales to rise 5%-7% in the second quarter of 3031, with adjusted EBIT rising the same and adjusted earnings per share to rise 81 cents to 83 cents, or 12%-15%.

For an update on how the coronavirus has affected convenience services, click here.