Campbell Soup’s (CPB) fiscal 3Q17 sales of $1.9 billion were marginally below analysts’ estimate and fell 1% YoY (year-over-year). Organic sales fell 1% because increased promotional spending more than offset its flat volumes. The company marked a stark decline in its top line in February due to low consumer spending amid a shift towards healthier foods and a delay in tax returns. Given the company’s sluggish results, management lowered its fiscal 2017 top line guidance. It expects sales to fall 1% or remain flat. Earlier, it projected that sales would remain even with the prior year or rise 1%.
Sales by segments
Sales for Americas Simple Meals and Beverages, which is Campbell Soup’s largest segment in terms of sales and profitability, fell 2% YoY to $982 million. There was a fall in soups and V8 beverages, which was partially offset by an increase in Prego pasta sauces.
Soup sales fell 4% due to lower sales of condensed soups and broth as a result of increased competition from private label products. Lower soup sales were partially offset by a rise in ready-to-serve soups (Chunky and Well Yes! soup line). Given the lackluster performance and ongoing challenges, management expects soup sales to fall in fiscal 2017. Meanwhile, Prego pasta sauces are projected to deliver healthy sales driven by increased consumption and expanded distribution.
The Campbell Fresh segment’s sales fell 6% to $248 million in fiscal 3Q17, reflecting production constraints following the company’s voluntary recall of Protein PLUS beverages last year. Although the segment is expected to report weak sales in fiscal 2017, management remains upbeat about the segment’s long-term prospects as consumers shift towards healthy food.
Amid the gloom, the company’s Global Biscuits and Snacks segment’s sales rose 2% to $623 million, reflecting higher sales of Pepperidge Farm and Arnott’s biscuits in Australia and Indonesia.