Campbell Soup Co. (CPB) fell the most in almost five years after saying its annual profit will be less than it previously estimated as soup and beverage sales slow.
Campbell declined 6.2 percent to $39.20 at the close in New York, for the biggest drop since December 2008. Shares of the Camden, New Jersey-based company have gained 12 percent this year, compared with a 25 percent increase for the Standard & Poor’s 500 Index.
Soups sales in the U.S. have dragged in recent months for Campbell, where it competes with private-labels and Progresso-maker General Mills Inc. (GIS) after colder temperatures last year bolstered results. Sales in Campbell’s U.S. soup division fell 6 percent during its fiscal first quarter as retailers reduced inventory amid a weaker consumer environment, the company said.
“Soup sales were soft once again and continue to present some risk to earnings for the year,” Christopher Growe, an analyst at Stifel Financial Corp. in St. Louis, said today in a note. “Sales growth will continue to be challenged in our view by the weak underlying sales trends across the business.” He rates the shares hold.
Adjusted profit in the year ending in July will increase by as much as 4 percent and as high as $2.58 a share, down from a prior forecast for growth of as much as 5 percent, the world’s largest soup maker said today in a statement. Analysts estimated $2.59.
First-quarter adjusted profit was 66 cents a share, trailing analysts’ 86-cent average estimate. Revenue fell 1.8 percent to $2.17 billion. Analysts had estimated $2.29 billion.
U.S. soup sales declined in part because retailers held orders until the second quarter because of the late Thanksgiving holiday. Condensed soup sales fell 7 percent while ready-to-serve varieties declined 11 percent. Beverage sales in the U.S. fell 8 percent led by V8 V-Fusion juice drinks.
New soups planned for introduction in July and August will instead be introduced between now and April in an attempt to boost sales, executives said during a conference call. The varieties include new Chunky and Hispanic-inspired cooking soups.
The company also had a recall of some Plum Organics baby food pouches, resulting in some costs it recognized in the quarter.
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