Campbell Soup reported lower-than-expected sales for the second quarter as the struggles of its fresh food business continued to weigh on the company.
Campbell Soup has diversified into fresh foods to offset the decline of its iconic canned soups and other packaged foods. Campbell Fresh includes refrigerated soups and the Bolthouse Farms’ lineup of fresh carrots, “super-premium” beverages and salad dressings.
But in the second quarter, the division’s sales fell 8% to $260 million, reflecting lower sales of carrots, Bolthouse Farms refrigerated beverages, and Garden Fresh Gourmet, partly offset by gains in refrigerated soup.
Overall, Campbell Soup earned $205 million, or 33 cents a share, compared with a year-earlier profit of $414 million, or 55 cents a share in the year-ago period. Revenue fell to $2.17 billion from $2.20 billion, below the FactSet consensus of $2.22 billion.
“I am not satisfied with our sales performance this quarter,” CEO Denise Morrison said in a news release.
She singled out Campbell Fresh, noting that its new management team “has conducted an extensive review of the business and has determined the recovery will take longer to execute than we originally planned. As a result, we no longer expect C-Fresh to grow this fiscal year.”
Nevertheless, Morrison added, “we remain confident in the growth potential of the packaged fresh category. C-Fresh continues to be an important strategic business for Campbell to meet growing consumer demand for fresh foods and interest in health and well-being.”
Morrison has said Campbell’s refrigerated salad dressings, fresh soups and protein drinks are a valuable toehold in the growing market for foods that connote health and wellness, though fresh food is significantly less profitable than selling shelf-stable foods like soup.
U.S. soup sales increased 1% in the second quarter, driven by ready-to-serve varieties, such as Chunky and the new Well Yes!, which performed above expectations. Excluding the favorable impact of currency translation, simple meals and beverage segment sales decreased 1 percent driven by declines in V8 beverages.