Campbell’s posted mixed second-quarter results as sales growth stagnated following a 7% fall in US soup sales after a key customer placed fewer orders for the brand’s soups.
The company’s overall net sales rose marginally to $2.18 billion from the $2.17 billion result recorded in the same period last year, but organic sales dropped 2%.
Campbell’s Americas Simple Meals and Beverages sector, which operates brands such as Campbell’s soup, V8 drinks and the recently-acquired Pacific Foods, posted a year-on-year 4% sales drop to $1.2 billion.
However, the brand’s overall results were improved by a 4% net sales increase in its Global Biscuits and Snacks division, with brand’s such as Pepperidge Farm and Kelsen performing strongly.
The company’s operating income also rose 19% to $243 million compared to the $205 million figure recorded last year.
Denise Morrison, Campbell’s president and CEO said: “This was a disappointing quarter, driven by continued challenges in U.S. soup and Campbell Fresh.
“The decline in organic sales was largely due to the performance of Americas Simple Meals and Beverages, where US soup sales decreased by 7% based on the key customer issue we discussed last quarter. We are making progress with this customer and expect sales declines in soup to moderate in the second half.
“Campbell Fresh did not meet expectations. Sales did not recover as anticipated due in part to headwinds in the super-premium juice category.
“Looking ahead to the spring, we expect our beverage innovation plans to drive improved beverage performance in the second half. We are committed to returning this business to profitable growth.
“Bright spots in the quarter included the sales performance of Global Biscuits and Snacks, particularly Pepperidge Farm and Kelsen, as well as our multi-year cost savings initiative. We have identified additional savings opportunities and are increasing our savings target to $500 million by the end of fiscal 2020.”
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