Campbell’s Push Into Fresh Food Stumbles, Sending Shares Fallingby
Poor carrot harvest, protein-drink recall hurt unit’s sales
CEO Morrison calls business’s performance ‘unacceptable’
Campbell Soup Co., the nearly 150-year-old company known for canned foods, is struggling to go fresh.
The shares tumbled as much as 5.7 percent after the company posted a disappointing forecast, hurt by a product recall and a poor carrot harvest at its Bolthouse Foods unit.
Campbell has so far failed to benefit from the major push it made into fresh food with its $1.55 billion acquisition of Bolthouse Farms four years ago. Since taking over the producer of carrots, juices and salad dressings, Campbell has been hampered by a drought that’s hurt its main growing region in California. Chief Executive Officer Denise Morrison said Thursday that the business has made matters worse with poor decisions, such as harvesting vegetables too early, which resulted in smaller carrots that upset customers.
“The performance of our Campbell Fresh business, driven predominantly by execution issues, is disappointing,” Morrison aid in a statement. “We have taken and are taking steps designed to ensure the business performs to its potential.”
Bolthouse also is suffering from reduced beverage production after problems with its equipment forced it to recall protein drinks in June for possible spoilage. Output hasn’t returned to pre-recall levels and will weigh on supply through the end of the year, she said.
The shares slipped as low as $57.24 in New York for the biggest intraday decline since May 20. Campbell had gained 16 percent this year through Wednesday.
Profit will be $3 to $3.09 a share in the fiscal year through July 2017, the Camden, New Jersey-based company said in Thursday’s statement. Analysts estimated $3.15, on average.
The company posted a fourth-quarter net loss of $81 million, compared with net income of $17 million a year earlier. Much of that loss was due to a $141 million charge to write down the value of Bolthouse Farms’ intangible assets and $138 million in mark-to-market losses for its pension and retirement plans.
Excluding those and other items, Campbell’s fourth-quarter profit was 46 cents a share. That trailed analysts’ 50-cent average projection.
Revenue from Campbell’s fresh-food unit fell 4.7 percent to $223 million in the fourth quarter, hurt by declining sales of Bolthouse carrots and refrigerated beverages. Excluding the revenue added by last year’s acquisition of the Garden Fresh Gourmet salsa company, the division’s sales tumbled 12 percent.
Morrison said Campbell has restructured the fresh-food unit and shaken up Bolthouse’s management, removing several senior managers in a bid to turn the business around. She called the Bolthouse issues “unacceptable.”
“These were execution issues, and we can do better,” she said on a conference call.