Campbell Soup earnings beat estimates, sales fall
Campbell Soup Company (CPB) reported fiscal first quarter earnings that topped estimates, while revenue was in line with Wall Street expectations. The packaged food and beverage company reported a 2% year-over-year decline in net sales, but reaffirmed its full-year guidance. CEO Mark Clouse said the results were "in line with our expectations." Yahoo Finance Live breaks down the results.
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Video Transcript
- Campbell's reporting its quarterly Q1 2024 earnings today. The soup giant is reaffirming its full year fiscal guidance and it's expecting to close on its acquisition of Sovos Brands next year. For this quarter, it beat the Street's expectations. But net sales declined 2% and its earnings per share is down 11%. Campbell CEO saying, it's seeing an encouraging start to the holiday season and plans to build momentum by stepping up its innovation and execution for this upcoming fiscal year. And we can see in terms of how it's being rewarded. At least in the pre-market, the stock is up in reaction to its latest results. And Madison, I know that, we're going to pivot a little bit and look at a specific stock. What stands out to you when you think about Campbell's results today?
MADISON MILLS: You know, I think about it as an indication of the strength of the consumer, right? Is this potentially a consumer trading down to goods that are a little bit more affordable with canned soups? And what does that mean when it comes to the Fed and what they're going to be doing moving forward? They did reaffirm their full year fiscal guidance, which is always rewarded by the Street. And they also mentioned continuing on that acquisition of Sovos that's [INAUDIBLE]. I'm going to get dragged for how I'm pronouncing it. I know there's a lot of debate on this.
- That's the pronunciation I would go with.
MADISON MILLS: I was freaked out just now. I walked--
BRAD SMITH: Just call it sauce.
MADISON MILLS: --into that. Sauce. I should have just said sauce. That's my bad, guys. I took a swing.
- It's true. But you make a good point about just the competition from private label and just-- so sure, consumers soup, in general, may be cheaper when you think about trade downs people are making. But then, Campbell's, does acknowledge that they have some private label competition. So they're seeing some volume impact, down 5%, in terms of the private label eating into their results.
BRAD SMITH: Look, at the end of the day, there's a lot of things that you could be upset about with this report. I've been blamed for being the holiday Grinch here on set too many times. So I'm going to look at something positive. We had a primary drive from increased spend in snacks here. Snacks could be recession resilient. We'll see if their GOP won.
- That's what I was-- yes.
BRAD SMITH: But at the end of the day, the increase is here and some of the kind of Grinch worthy call outs. You did see gross profit slippage, you saw some unfavorable mix that the company cited. You also saw higher advertising and consumer promotion expenses. That increased 6%. But it's so that they could advertise the snacks at the end of the day. So--
- Yes. And they do still have some pricing power because they said some of that decline in volume was offset by raising prices in general. So we have seen that they still have some strength with pricing power when it comes to their products. And we also know that consumers tend to be brand loyalists as well. So that certainly helps. I mean, look, I have some Campbell's in my cupboard right now.
MADISON MILLS: Same. Same. I was thinking that. I was thinking that.
- Exactly. So you know-- so right now, in terms of-- we'll see shortly when the market opens, how would actually-- what the initial reaction is to their latest results. But again, so we know they are facing the competition from private label, but they are standing up to that competition with their pricing power, even despite the inflationary environment that we continue to deal with in terms of consumer goods.
MADISON MILLS: Well-- and it's the latest example of an earnings beat, which I feel like is kind of the story of earnings this year.
BRAD SMITH: Absolutely.
