Vending

Campbell Soup Q3 2021 sales, earnings falter following COVID-19

Image courtesy of iStock.

June 9, 2021

Campbell Soup Co.'s net sales decreased 11% from $2.25 billion in Q3 2020 to to $1.98 billion in the quarter ending May6 2, 2021, while organic net sales decreased 12% primarily as a result of lapping unprecedented demand of food purchases for at-home consumption at the onset of the COVID-19 pandemic in the prior-year quarter, according to an earnings report.

Earnings before interest and taxes dipped from $273 million in Q3 2020 to $272 million in Q3 2021.

Diluted earnings per share fell 2% from 55 cents to 54 cents on a GAAP basis in the comparative quarters, and from 83 cents to 57 cents on an adjusted basis.

The $1.98 billion in revenue missed analyst expectations by $30 million, according to Seeking Alpha, while the Non-GAAP EPS of 57 cents missed expectations by 9 cents and the GAAP EPS of 54 cents missed by 8 cents.

Shares traded at $45.81 today against a 52-week range of $43.54-$53.37.

"While we recognized the third quarter would be a challenging net sales comparison to the demand surge at the onset of the COVID-19 pandemic a year ago, we faced additional headwinds," President and CEO Mark Clouse said in a press release. "Our results were impacted by a rising inflationary environment, short-term increases in supply chain costs and some executional pressures as we continued to advance our transformation agenda, primarily in our snacks division.

"Nearly three-quarters of our portfolio gained or held share in the quarter, with most of our core categories having grown at higher rates than pre-pandemic levels."

Meals and beverages net sales in the quarter decreased 14% and organic net sales decreased 15% primarily due to declines across U.S. retail products, including U.S. soup and Prego pasta sauces as well as declines in Canada and foodservice.

Volume decreased in U.S. retail driven by lapping increased demand of food purchases for at-home consumption at the onset of the COVID-19 pandemic in the prior-year quarter.

Sales of U.S. soup decreased 21% due to volume declines in condensed soups, ready-to-serve soups and broth.

Snack sales in the quarter, both reported and organic, decreased 8% driven by volume declines within the salty snacks portfolio, including Pop Secret popcorn, Cape Cod potato chips and Snyder's of Hanover pretzels, as well as in Lance sandwich crackers, partner brands and fresh bakery. Volume declines were partially driven by lapping increased demand of food purchases for at-home consumption at the onset of the COVID-19 pandemic in the prior-year quarter.

The company updated its full-year fiscal 2021 guidance to reflect its third-quarter results and the impact of the sale of the Plum baby food and snacks business on May 3, 2021.

In the fourth quarter, the company expects continued margin pressure related to its transition out of the COVID-19 environment, and more pronounced inflation while pricing actions take hold in the beginning of fiscal 2022.

The company has adjusted net sales downward for the full year to decline between 3% and 3.5%, for adjusted earnings before interest and taxes to decline 4% to 5%, and for adjusted EPS to decline 1% to 2%, from $2.90 to $2.94.

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