Campbell Soup Co., Camden, N.J., reported a 2 percent decline in sales to nearly $2.2 billion for the first quarter of fiscal-year 2014, which includes the three months ending Oct. 27. Organic sales decreased by 4 percent. These results were negatively impacted by inventory movements at U.S. retailers and program timing, weakness in core business trends, front-loaded marketing investments to support new products and build the Bolthouse Farms brand, and a voluntary recall of a range of Plum Organics pouch products, the company says.
Specifically, marketing and selling expenses increased 11 percent to $261 million. The increase was primarily driven by higher advertising to support new product launches, including Campbell’s Homestyle soups and Campbell’s dinner sauces, as well as the Bolthouse Farms brand.
Foodservice sales as well as sales of Bolthouse Farms beverages, salad dressings and carrot products increased 2 percent compared with the year-ago period, reaching $330 million. Volume and mix subtracted 2 percent, and an additional week of Bolthouse Farms sales added 4 percent, the company notes. Excluding the additional week of Bolthouse Farms sales, segment sales decreased 2 percent; however, Bolthouse Farms sales were comparable to a year ago as sales growth in premium refrigerated beverages and salad dressings were offset by declines in juice concentrates.
Sales for U.S. beverages, including the entire V8 juice and juice drink portfolio as well as Cambell’s tomato juice, reached $173 million in the first quarter, marking an 8 percent decrease compared with the year-ago period. Volume and mix subtracted 9 percent; price and sales allowances subtracted 1 percent; and decreased promotional spending added 2 percent. The decrease in sales was primarily due to declines in V8 V-Fusion beverages. Sales of V8 vegetable juice and V8 Splash beverages also declined. Operating earnings for the quarter were $24 million compared with $30 million in the prior year. The decrease in operating earnings was primarily due to lower volumes, the company says.
“I’m disappointed in Campbell’s first-quarter performance,” said Denise Morrison, Campbell’s president and chief executive officer, in a statement. “We are confident in our plans to improve our performance in the remaining three quarters. Given our slow start to the year, we are lowering our fiscal 2014 guidance.”
In fiscal-year 2014, Campbell now expects continuing operations to grow sales by 4 to 5 percent, adjusted earnings before interest and taxes (EBIT) to grow by 4 to 6 percent, and adjusted earnings per share (EPS) to grow by 2 to 4 percent. Fiscal-year 2014 guidance includes the benefits of a 53rd week and acquisitions, the estimated impact of currency translation, and the impact of presenting revenue on a net basis in connection with the company’s new business plan to expand access to manufacturing and distribution capabilities in Mexico.
