The coronavirus turned out to be chicken soup for Campbell’s profits, but hungry investors were still scraping the bottom of the can.
The canned-soup giant reported a 15 percent surge in quarterly net sales Wednesday thanks to consumers stockpiling shelf-stable foods amid the pandemic.
But customers snapped up Campbell’s items so fast last quarter that the company struggled to keep up with demand, according to Chief Executive Mark Clouse. The initial stockpiling “exceeded shipment capacity,” and the company is working to add capacity amid continued supply challenges, he said.
“Revenues lagged in-market consumption as [Campbell] strained to meet the surge in demand and retailer inventories depleted,” Bank of America analyst Bryan D. Spillane said in a note. The company “would have sold more if they could have made more product.”
Campbell’s shares slid as much as 4.7 percent to $49.54 in early trading Wednesday.
The New Jersey-based company’s signature soups saw a 35 percent spike in US net sales for the three months ending April 26, a period marked by coronavirus-fueled panic shopping. Net sales jumped 20 percent in Campbell’s broader meals and beverages segment, which includes brands such as SpaghettiOs and Prego pasta sauce.
The sales boom came as millions of new consumers bought Campbell’s products, with millennials making up the largest cohort, Clouse said. The company said its “household penetration” rose nearly 10 percentage points compared to the same quarter last year.
“Consumers also have gravitated to these brands because of the comfort they bring,” Clouse said in prepared comments. “All of them have seen significant consumption gains during the crisis.”
Campbell also increased marketing expenses by 26 percent to keep its brands relevant with a focus on snack ideas and recipes, the company said.
Campbell reported adjusted earnings of 83 cents a share for its third fiscal quarter, beating Wall Street’s expectations for about 75 cents a share, according to Bloomberg data. The company now expects net sales to jump 5.5 to 6.5 percent for 2020, up from previous guidance for a 1 percent increase at most.