Campbell Soup sales fall but progress remains encouraging

Campbell Soup’s sales have fallen in the first quarter 2020. However, the company’s results are in line with market expectations and Campbell remains upbeat about future progress.

While sales fell 1 per cent to $2.2 billion compared to the same period in 2019, Campbell has seen encouraging signs of growth – particularly in the snacks segment where sales increased by 2 per cent.

Campbell has also seen growth in its soup market share. The company has been working to stop the share loss that it has been experiencing in this category over the last several years.

While soup sales declined 3 per cent in the quarter, it grew or maintained share across the condensed, ready to serve and broth categories. Campbell plans to invest more in its soup business and hopes to make gains from the food industry’s crucial soup season.

“I feel good about the direction in which we are headed on soup; including the improvements we’re seeing on Pacific, which we expect to return to top line growth this year,” said Mark Clouse, president and chief executive of Campbell Soup. “Our ready-to-serve businesses in the latest four weeks are up about 7 per cent and our condensed eating soups are up almost double digits.”

Clouse added that he is “encouraged by how the portfolio is responding to the actions we are taking”. These actions include a focus on quality perception. “As I’ve emphasised from day one, change won’t happen overnight. Looking ahead to the second quarter, we expect that our net sales profile in the US soup business will continue to improve.”

Meanwhile, the company reported a 3 per cent decline, to $1.2bn, in its Meals & Beverage sector. It explained that this was largely due to the timing of US soup shipments related to the Thanksgiving holiday. However, Clouse admitted that the company has a lot of work to do in order to stabilise this business.

In snacks, sales in the quarter increased 2 per cent to approximately $1bn. This was driven by gains in Goldfish crackers as well as growth in fresh bakery products, Pepperidge Farm cookies and Cape Cod and Kettle Brand potato chips, offset partially by declines in the partner brands.

“While we have more work to do in terms of stabilising the topline, we are slightly ahead of schedule on margins and EBIT and I’m very pleased with our progress around building a winning team and culture, especially the speed at which we have implemented our new operating model and how we are adding new skills and capabilities while saving cost. On balance, we are doing what we said we would do,” Clouse concluded.