Campbell Soup Company (NYSE: CPB) experienced a significant drop in its shares, plunging more than 6% in pre-market trading on Wednesday. This occurred despite the food company surpassing Wall Street’s estimates for third-quarter profit.
Campbell Soup, renowned for its popular Pepperidge Farm cookies, managed to outperform expectations. This success can be attributed to its implementation of multiple rounds of price increases. The strategy has been adopted by various packaged food companies, including Kraft Heinz and Kellogg Co, as a means to counterbalance elevated input costs resulting from supply chain disruptions and the ongoing Russia-Ukraine conflict.
Interestingly, J M Smucker, a competitor in the market, projected a smaller-than-expected decline in annual sales due to higher prices and steady demand for their products.
Campbell Soup Company witnessed a 12% increase in its average selling price during the quarter. However, the company also experienced a worrisome 7% decline in total volumes. However, the company faced a worrisome 7% decline in total volumes. This decline indicates that price-conscious American consumers were increasingly drawn to more affordable private-label products.
Despite these market fluctuations, Campbell Soup Company maintained its annual net sales forecast, anticipating a rise of 8.5% to 10%. In addition, the company held on to its adjusted profit expectations, which ranged from $2.95 to $3.00 per share.
The company’s third-quarter gross profit margin came in at 30%, a drop from the previous year’s 31.2%. This decrease was primarily influenced by persistently high commodity and freight prices, as well as increased marketing expenses.
Excluding one-time items, Campbell Soup Company reported quarterly earnings of 68 cents per share, which exceeded analysts’ estimates of 64 cents per share. This information is based on Refinitiv IBES data.
Furthermore, the company reported a 5% increase in net sales, reaching $2.23 billion, aligning with market expectations.
Campbell Soup Company CPB NYSE: CPB
