Campbell Soup (CPB) 2021 Q3 Financial Results Preview

Campbell Soup Company’s (NYSE:CPB) history dates back to 1869 when fruit merchant Joseph Campbell and canning factory owner Abraham Anderson joined hands to form a business. Their company initially produced canned vegetables, jellies, mincemeat, among other canned products. Nobody knew back then that a company with such humble beginnings would one day become a leader in the processed foods and snacks business.

The company recently announced weak financial results for the third quarter primarily due to soft sales. Campbell reported earnings of 52 cents per share for the three months ended May 2, lower than 55 cents per share in the comparable period of 2020. On an adjusted basis, earnings slipped to 57 cents per share, missing the consensus forecast of 66 cents per share.

Revenue for the quarter fell 11 percent to $1.984 billion, slightly below analysts’ average estimate of $1.998 billion. If we look at the performance of key segments, meals and beverages revenue declined 15 percent to 1.04 billion, while snacks revenue slipped 8 percent to $945 million.

Speaking on the results, CEO Mark Clouse said in a statement, “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. 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. We are confident that these are all addressable, and we are taking appropriate actions, including putting pricing in place for the next fiscal year. Our confidence is further strengthened by the underlying health of our brands. 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.”

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Campbell also slashed its earnings outlook for fiscal 2021. The company is now expecting adjusted earnings in the range of $2.90 per share to $2.93 for the full year, below its previous guidance between $3.03 per share to $3.11 per share (see 10 best food stocks to buy).