The corona virus turned out to be a chicken soup for Campbell’s benefit, but hungry investors still scratched the bottom of the can.
The canned soup giant reported a 15 percent surge in quarterly net sales on Wednesday as consumers hoarded stable food amid a pandemic.
But customers picked up Campbell’s goods so quickly last quarter that the company struggled to meet demand, according to Chief Executive Mark Clouse. Initial stockpiling “exceeds shipping capacity,” and the company is working to add capacity amid the challenges of sustainable supply, he said.
“Income lags behind consumption in the market [Campbell] trying to meet the surge in demand and retailers’ inventory runs out, “said Bank of America analyst Bryan D. Spillane in a note. The company” will sell more if they can make more products. “
Campbell’s shares slumped as much as 4.7 percent to $ 49.54 in early trading Wednesday.
The typical New Jersey-based company soup showed a 35 percent increase in US net sales for the three months ended April 26, a period marked by panic spending triggered by coronavirus. Net sales surged 20 percent in the wider Campbell food and beverage segment, which includes brands such as SpaghettiOs and Prego pasta sauce.
Sales boom comes when millions of new consumers buy Campbell products, with Millennials forming the largest group, Clouse said. The company said “household penetration” rose by almost 10 percentage points compared to the same quarter last year.
“Consumers are also interested in these brands because of the convenience they bring,” Clouse said in comments prepared. “All of them have seen a significant increase in consumption during the crisis.”
Campbell also increased marketing costs by 26 percent to keep the brand relevant by focusing on snack ideas and recipes, the company said.
Campbell reported adjusted earnings of 83 cents per share for the third fiscal quarter, beating Wall Street’s expectations for around 75 cents per share, according to Bloomberg data. The company now expects net sales to surge 5.5 to 6.5 percent for 2020, up from the previous guide for the most 1 percent increase.
