Campbell Soup Company fell as much as 3.5% in early trading after posting another decline in soup demand, hurt by a dispute with Walmart.
US soup sales dropped 7% last quarter, the company said on Friday. It blamed an ongoing issue with a “key customer” - previously identified as Walmart. The world’s largest retailer, which sells more groceries in the US than anyone else, has been paring its inventory of packaged foods.
Campbell also is struggling to expand its fresh-food business. Sales in that division were hurt by sluggishness in premium juice, Chief Executive Officer Denise Morrison said.
“This was a disappointing quarter,” she said in a statement. As Campbell works with Walmart, the company expects “sales declines in soup to moderate in the second half.”
While it copes with the soup slowdown, Campbell is seeking other sources of growth.
In December, the company agreed to buy Snyder’s Lance in a bid to push deeper into salty snacks - a bright spot in a broader packaged-food slump. Campbell, which already makes Goldfish crackers, will get brands such as Cape Cod potato chips and Snyder’s pretzels as part of the deal.
Second-quarter earnings topped analysts’ estimates, but that was mostly due to a lower tax rate. Profit amounted to $1 a share, excluding some items. Analysts had estimated 84 cents.
Concerns about the underlying business sent Campbell shares down as low as $46.01 in premarket trading. The stock was already down almost 1% this year through Thursday’s close.