Campbell Gets Left Out in the Cold

Campbell Soup Co. is finally making the right moves. They might not be enough.

The maker of soups and snacks on Wednesday reported earnings for the final quarter of its fiscal year and cleared a very low expectations bar. Organic net sales, after stripping out the impact of a baby-food divestiture and an extra week in the quarter, fell 4% from a year earlier in the three months ended Aug. 1. Analysts had expected a decline of around 6%. Adjusted operating income fell 13% from a year earlier, also exceeding analyst estimates.

Campbell’s shares were up around 2% midday Wednesday despite the company’s underwhelming guidance for the current fiscal year. It expects organic net sales to be essentially flat from a year earlier and adjusted operating income to decline by 5% to 8%.

Packaged-food makers aren’t having the best of times at the moment as consumers, no longer locked up at home, are enjoying more meals out. Cost-input inflation is also putting pressure on the entire sector. But Campbell seems more impacted than its peers. Its shares are down around 12% so far this year compared with a rise of around 8% in the S&P 500 consumer staples index. Rivals Kraft Heinz and General Mills are up 4% and down 2% respectively.

This might be partly down to the company’s rather stodgy brands, particularly its namesake soups, which almost epitomize the kind of pandemic-era dining that many are eager to ditch. In the company’s defense, it is embarking on a long-overdue refresh of these products, including simplified ingredients and modernized packaging to boost their appeal to younger consumers. New products include Campbell Chunky Spicy Chicken Noodle, which Chief Executive Mark Clouse boasted on a conference call is “fantastic.” There are also more premium innovations such as plant-based cream soups through the company’s organic Pacific Foods brand.

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