Campbell Soup surpassed Wall Street expectations for quarterly profit, benefiting from higher prices for its packaged meals and snacks that helped offset a slowdown in demand from cost-conscious consumers.
Shares of Campbell, which expects to complete the acquisition of Rao's owner Sovos Brands by next year, rose 2% premarket, after it also reaffirmed its full-year 2024 outlook.
Global producers of staple food have consistently bumped up product prices over the past year to counter higher input and labour costs, even as some of the expenses like those linked to supply chain have now come down from their peaks.
Average selling prices in Campbell's meals and beverages division, which also includes soups, rose 2% in the first quarter, while prices for its snacks brands – including Goldfish crackers and Cape Cod potato chips – increased by 5%.
However, overall volumes dropped 5% as customers have chosen to switch to cheaper alternatives such as private-label brands at retailers amid persistent inflation, causing a decline of 10 basis points in adjusted gross margins to 32.1%.
Results 'In Line With Expectations'
“Our first-quarter results were in line with our expectations, as we continue to effectively navigate the current consumer landscape, while lapping 15% growth rates from a year ago,” Mark Clouse, Campbell's president and CEO said in a statement.
“We are off to an encouraging start in our important holiday season, and we expect to build momentum for the balance of the fiscal year behind disciplined execution, stepped up innovation, and the overall relevance of our brands in this current environment.”
Net sales at Campbell dropped 2% to $2.52 billion (€2.3 billion) in the first quarter, in line with analysts' average estimate, according to LSEG data.
Excluding items, the company earned 91 cents per share, beating analysts' estimate of 88 cents.