Campbell's shares slump in the pre-market after "disappointing" results

 
Billy Bambrough
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Campbell's Soup Posts Strong Quarterly Earnings
The iconic Campbell brand has been forced to move towards fresh produce recently (Source: Getty)

Consumer demand for fresher produce is putting the squeeze on the world's largest maker of soup, Campbell's.

The soup brand has posted a net loss attributable to the company of $81m (£61m), or 26 cents per share, compared with a profit of $17m a year earlier.

Net sales dipped 0.35 per cent to $1.69bn in the fourth quarter ended July 31, with the performance of its fresh and organic foods department branded "disappointing" by its chief executive.

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Shares in the business slumped by almost five per cent in the US pre-market, though shares are up over 15 per cent in the year to date.

Campbell's has been contending with stagnant sales growth in its canned soups and V8 juices as consumers increasing opt for fresher food with perceived health benefits.

Last year Campbell's extended its reach in the fresh-food aisle by acquiring salsa and hummus maker Garden Fresh Gourmet for $231m.

It's also had to contend with higher carrot costs and lower sales of carrots and carrot ingredients at its Bolthouse Farms unit and a recall of protein drinks in June.

Denise Morrison, Campbell’s president and chief executive, said:

I am not pleased with the results of our fourth quarter. The performance of our Campbell Fresh business, driven predominantly by execution issues, is disappointing. We have taken and are taking steps designed to ensure the business performs to its potential. We remain confident in our Campbell Fresh strategy and its ability to deliver long-term growth consistent with its portfolio role.

In its fiscal 2017 guidance, Campbell's said it expects sales to stay flat or climb one per cent, adjusted earnings before interest and taxes to increase by one per cent to four per cent and adjusted earnings per share to jump by two per cent to five per cent.

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Fast food chains – like McDonald's – have also been battling against falling sales as consumers ditch old favourites for supposedly healthier alternatives.

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