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stock dived Wednesday, after the packaged food maker’s latest earnings report included downbeat commentary about inflation and a lowered outlook.
For its fiscal third quarter, Campbell (ticker: CPB) said it earned $160 million, or 52 cents a share, down from 55 cents a share in the year-ago period. On an adjusted basis, which strips out nonrecurring items, the company earned 57 cents a share. Revenue declined 11% to $1.98 billion. Analysts were looking for per-share earnings of 66 cents on revenue of $2 billion.
Comparable sales fell 12% year over year, as the company lapped a surge in demand from pantry stockpiling in 2020 during the pandemic.
The stock dived 8.2% to $45.10 in recent trading. The shares have gained 1.6% year to date and have edged up 0.4% in the past 12 months.
Campbell pointed to the end of the pandemic as one reason for the decline in sales, as more people return to restaurants. The company also flagged “a rising inflationary environment, [and] short-term increases in supply chain costs.”
Campbell is hardly the only consumer company dealing with rising inflationary pressures. Investors, however, may have been disappointed by just how much these pressures weighed on Campbell’s margins, especially as other companies seem to have navigated the headwinds more successfully. Campbell’s gross margins were down 290 basis points in the quarter, significantly more than the expected decline of 50 basis points.
In addition, supply chain issues meant that sales of many of Campbell’s products fell below that of peers for the quarter, sharpening the impact of the postpandemic transition.
For the full year, Campbell lowered its forecast, saying it now expects to earn an adjusted $2.90 to $2.93 a share, down from its prior guidance of $3.03 a share. That compares to EPS of $2.95 last fiscal year. Analysts are looking for EPS of $3.08.
The company is looking for sales to fall between 3% and 3.5% for the year, compared with its previous guidance for a 2.5% to 3.5% drop. It sees full-year comparable sales falling 0.7% to 1.2%, compared with 0.5% to 1.5% previously.
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