Campbell Soup stock dived Wednesday after the packaged food maker's latest earnings report included downbeat commentary about inflation and a lowered outlook.
For its fiscal third quarter, Campbell (ticker: CPB) said it earned $160 million, or 52 cents a share, down from 55 cents a share in the year-ago period. On an adjusted basis, which strips out nonrecurring items, the company earned 57 cents a share. Revenue declined 11% to $1.98 billion. Analysts were looking for per-share earnings of 66 cents on revenue of $2 billion.
The stock fell 4.5% to $46.95 in recent trading. The shares have fallen 2.9% year to date and 4.1% in the past 12 months.
Comparable sales fell 12% year over year, as the company lapped a surge in demand from pantry stockpiling in 2020 during the pandemic. Campbell said 2020's "unprecedented demand of food purchases" at the start of the pandemic created tough comparisons for the latest quarter, but noted that "nearly three-quarters of our portfolio gained or held share in the quarter."
Campbell also flagged "a rising inflationary environment, [and] short-term increases in supply chain costs."
Campbell is hardly the only consumer company dealing with rising inflationary pressures . Investors, however, may have been disappointed by just how much these pressures weighed on Campbell's margins, especially as other companies seem to have navigated the headwinds more successfully . Campbell's gross margins fell to 31.7% from 34.5% last year, significantly outpacing the expected decline of 50 basis points.
In addition, supply chain issues meant that sales of many of Campbell's products fell below that of peers for the quarter, sharpening the impact of the postpandemic transition.
For the full year, Campbell lowered its forecast, saying it now expects to earn an adjusted $2.90 to $2.93 a share, down from its prior guidance of $3.03 a share. That compares to EPS of $2.95 last fiscal year. Analysts are looking for EPS of $3.08.
The company is looking for sales to fall between 3% and 3.5% for the year, compared with its previous guidance for a 2.5% to 3.5% drop. It sees full-year comparable sales falling 0.7% to 1.2%, compared with 0.5% to 1.5% previously.