What Impacted Campbell Soup’s Fiscal 4Q17 Sales?
Top line versus estimate
Campbell Soup’s (CPB) fiscal 4Q17 sales of $1.7 billion fell short of analysts’ expectation and fell 1% YoY (year-over-year). Meanwhile, organic net sales fell 1% due to lower volumes, especially in the Americas Simple Meals and Beverages segment. Retailers reduced soup inventories in the US (SPY) due to lower consumer uptake, which had a negative impact on the company’s volumes during the quarter. Lower V8 beverages sales continued to remain a drag. Higher promotional spending in the soup and beverages category pressured its sales growth.
For fiscal 2018, the company’s top line fell 1% due to lower volumes, a negative mix, and promotional spending.
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In comparison, other major food manufacturing companies such as Kellogg (K), Kraft Heinz (KHC), Conagra Brands (CAG), and General Mills (GIS) are also witnessing lower sales due to consumers’ shift towards healthy and fresh food. Retailers’ inventory destocking and private label players’ rise are also a challenge.
Sales by segment
Campbell Soup’s Americas Simple Meals and Beverages segment’s sales fell 3% during the quarter, which reflected lower soup and V8 beverage sales. US (SPY) soup sales fell 4% due to a fall in broth, condensed soups, and ready-to-serve soups. The fall was driven by retailers destocking inventories.
Meanwhile, sales in the Global Biscuits and Snacks segment remained flat. Growth in the Pepperidge Farm brand was offset by a fall in Arnott’s business in Indonesia.
Notably, the Campbell Fresh segment’s sales improved 1% during the quarter due to the rise in demand for carrots, carrot ingredients, and Garden Fresh Gourmet. The rise was partially offset by a fall in Bolthouse Farms’ refrigerated beverages.
Campbell Soup’s sales will likely remain low in the coming quarters. Management expects fiscal 2018 sales to remain flat or fall 2%. Lower soup sales in the US and lower promotional support will likely have a negative impact on the sales growth. However, sales in the Global Biscuits and Snacks and Campbell Fresh segments will likely improve on a YoY basis.