The condensed soup aisle is a lonely place these days.
Campbell Soup Co. cut its annual forecast today, saying US shoppers aren’t buying enough soup - especially the condensed varieties that have long been a staple of American pantries.
The company now expects sales to grow about 3%, compared with a previous range of as much as 5%. The news sent the stock down as much as 7.1%.
Campbell, based in Camden, New Jersey, is struggling to rekindle Americans’ appetite for soup despite a push to promote the products last quarter. While the company’s cooking broth and sauces posted sales gains in the period, Campbell’s condensed soup decreased 3%. Ready-to-serve soups, which don’t require adding water, dropped 1%.
“I am disappointed that our plans did not drive stronger sales results in US soup,” Denise Morrison, Campbell’s chief executive officer, said in the statement. “Despite an increase in the frequency of our promotional activity in the third quarter, we did not realize the anticipated lifts in a challenging consumer environment.”
The shares tumbled as low as $41.92 in New York, marking the biggest intraday decline since November 2008. The stock had been up 4.3% this year before today.
Year-Earlier Gain
Campbell’s US soup division had a 14% sales gain in the year-earlier quarter, making it tough to maintain growth. Still, the latest performance fell short of the company’s expectations, Morrison said.
Campbell also said that earnings will be at the low end of its previously announced range of $2.53 to $2.58 a share, excluding some items. Analysts were already predicting $2.53 on average, according to data compiled by Bloomberg. The company has been working to cut costs by closing two plants and eliminating about 700 full-time jobs.
The problem may be that Campbell’s latest soup offerings aren’t winning over consumers, Erin Lash, an analyst at Morningstar Inc., said in a report. Increased promotions can’t solve that, she said.
“We’ve been saying for quite some time that promotions are not a sustainable strategy to drive long-term profitable top-line growth,” Lash said. “While Campbell has been working to turn around its U.S. soup and beverage businesses, this quarter’s results showcase the firm has yet to gain much traction.”
Bloomberg
