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What Are Campbell Soup’s Revenue Expectations for Fiscal 2Q16?

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Sales estimated to decline slightly

Campbell Soup (CPB) mentioned in its preliminary results that it expects reported net sales for 2Q16 to decline by ~1% to $2,201 million due to the negative impact of currency translation. However, the company does expect it to be partially offset by the acquisition of Garden Fresh Gourmet.

Organic net sales are estimated to be comparable to the prior year period. Analysts expect revenue for fiscal 2Q16 to be around $2,197 million. This would mean a fall of ~2% if it’s in line with estimates and compared to $2,234 million of sales in 2Q15.

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Drivers of last quarter’s sales

Campbell Soup reported net sales of $2.2 billion in fiscal 1Q16, a fall of 2.3% compared to fiscal 1Q15. Organic sales were in line with 1Q15 and the company’s expectations. Higher selling prices with a reduction in promotional spending compensated by a decline in volume contributed to the organic sales performance. The sales were almost in line with analysts’ estimates.

The company reported revenue close to its estimates in the last two quarters. The decline in total net sales of 2% was due to factors within organic sales. It included a negative impact of 2% from volume and mix. This was particularly driven by US soup within Americas Simple Meals and Beverages and the carrots ingredients business within Campbell Fresh.

Positive contributions included a 1% impact from higher selling prices in Americas Simple Meals and Beverages. It reflected the company’s pricing actions on condensed soup, Prego pasta sauce, and food service in the United States and across the Canadian portfolio. Additionally, lower promotional spending in Global Biscuits and Snacks and the company’s recent acquisition of Garden Fresh Gourmet added another 2%. There was, however, an adverse impact of 3% from currency translation.

Peers’ revenue estimates

Campbell’s competitors in the industry are General Mills (GIS), ConAgra Foods (CAG), and Kraft Heinz (KHC). The revenue estimates for these companies for their upcoming quarter are as follows:

  • GIS is expected to report $4.1 billion in fiscal 3Q16.
  • CAG is expected to report $2.8 billion in fiscal 3Q16.
  • KHC is expected to report $7.0 billion in fiscal 4Q15.

The PowerShares Dynamic Food & Beverage (PBJ) and the Guggenheim S&P 500 Equal Weight Consumer Staples ETF (RHS) invest 3.0% and 2.7%, respectively, in CPB.

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