The coronavirus turned out to be chicken soup for Campbell’s profit, but hungry investors were still scraping the bottom of the can.
The canned soup giant reported a 15 percent increase in quarterly net sales on Wednesday thanks to consumers storing stable food amid the pandemic.
But customers bought Campbell’s items so fast last quarter that the company struggled to keep up with demand, according to CEO Mark Clouse. Initial storage “exceeded shipping capacity,” and the company is working to add capacity amid continuing supply challenges, he said.
“Revenue lagged consumption in the market as [Campbell] it struggled to meet rising demand and retail inventories were depleted, “Bank of America analyst Bryan D. Spillane said in a note. The company” would have sold more if they could have made more product. “
Campbell’s shares fell as much as 4.7 percent to $ 49.54 in early trading Wednesday.
The exclusive soups of the New Jersey-based company saw a 35 percent increase in US net sales. USA During the three months ending April 26, a period marked by panic purchases fueled by coronavirus. Net sales increased 20 percent in Campbell’s broader food and beverage segment, which includes brands like SpaghettiOs and Prego pasta sauce.
The sales boom It came when millions of new consumers bought Campbell’s products, and millennials make up the largest cohort, Clouse said. The company said its “family penetration” increased nearly 10 percentage points compared to the same quarter last year.
“Consumers have also leaned toward these brands because of the convenience they provide,” Clouse said in prepared comments. “They have all seen significant increases in consumption during the crisis.”
Campbell also increased marketing expenses by 26 percent to keep its brands relevant with a focus on snack ideas and recipes, the company said.
Campbell reported adjusted earnings of 83 cents a share for its fiscal third quarter, beating Wall Street expectations of about 75 cents a share, according to Bloomberg data. The company now expects net sales to increase between 5.5 and 6.5 percent by 2020, above the previous guidance for a maximum 1 percent increase.