Campbell Soup Company (NYSE:CPB) dished up a worse-than-expected fall in second quarter sales, reflecting a poor performance in its fresh food business.
Revenue dropped 1.4% to $2.17bn in three months to 31 January, compared to $.2.20bn the same period a year earlier. Analysts had expected revenue of $2.22bn, according to a poll of analysts by Thomson Reuters.
“I am not satisfied with our sales performance this quarter,” chief executive Denise Morrison confessed.
“Declines were most prominent in Campbell Fresh driven by a market share decline and weather-related issues in carrots, capacity constraints from the Bolthouse Farms Protein PLUS recall last June, and Garden Fresh Gourmet.”
The fresh foods business, which accounts for about 12% of total revenue in the second quarter, reported an 8% sales decline.
During the period, the company took a non-cash charge of $147mln to reduce the value of assets in its Bolthouse Farms' carrot business and a non-cash charge of $65mln in its fresh foods unit.
Earnings per share (EPS) slid to 33c from 85c and overall net earnings dropped to $101mln from $265mln, including the impairment charges.
Excluding the charges, EPS rose to 91c from 87c, beating analysts’ estimates of 88c.
The dividend was cut to 35c from 31c.
“Looking ahead, we expect to improve our sales performance in the back half and are maintaining our guidance for the fiscal year,” Morrison said.
The group also expects to reach its targeted cost savings a year ahead of schedule. It lifted its savings goal from $300mln by the end of fiscal 2018 to $450mln by the end of fiscal 2020.
Shares fell 5.23% to $59.28 in early US trading.