Campbell Warns Of Challenging Quarter As Winter Storm Disrupts Production

By Dayeeta Das
Share this article
Campbell Warns Of Challenging Quarter As Winter Storm Disrupts Production

Campbell Soup Co expects current-quarter sales to be pressured due to supply chain disruptions caused by a major winter storm and deep freeze that engulfed several US states.

The soups and snacks maker, which benefited from rising demand for its ready-to-eat or quick-fix meals during the pandemic, said its plant in Texas, where it makes Prego pasta sauces, was closed for two weeks in December.

An increasing number of COVID-19 cases also led to fewer staff operating its plant during winter, a key period for the soup maker when consumers seek comfort food.

"We crossed the double-digit line on absenteeism, which was really the highest we had seen," chief executive officer Mark Clouse told analysts, adding that it led to delayed shipments.

"It really did reduce a little bit of our firepower as we had expected to be able to get in front of consumption and ship a bit ahead of it."



The company forecast sales to fall 3.5% to 2.5% in fiscal 2021, following a year when demand surged as consumers stockpiled on soups and snacks before the pandemic-induced lockdowns.

A gradual reopening of restaurants and the rollout of vaccines could reduce consumers' reliance on packaged food.

J.P. Morgan analyst Ken Goldman said the forecast would be a let down to some investors, considering the food-at-home category has performed better than anticipated in general.

Campbell expects adjusted annual earnings between $3.03 and $3.11 per share, compared with analysts' average estimate of $3.03 per share, according to IBES data from Refinitiv.


Quarterly Performance

Second-quarter sales rose 5.4% to $2.28 billion, but fell below expectations, hurt by declines in its food services segment that sells products to bakeries and restaurants, and pandemic-led supply constraints.

"Nearly 75% of our brands grew or held share which was an important goal for the quarter... we are confident in the long-term growth potential of Campbell," Clouse said.

News by Reuters, edited by ESM. Click subscribe to sign up to ESM: European Supermarket Magazine.

Get the week's top grocery retail news

The most important stories from European grocery retail direct to your inbox every Thursday

Processing your request...

Thanks! please check your email to confirm your subscription.

By signing up you are agreeing to our terms & conditions and privacy policy. You can unsubscribe at any time.