CAMDEN, NJ – Campbell Soup Company reported a surpassing of Wall Street expectations for quarterly profit on Wednesday. The company’s strategy of increasing prices for its snacks and packaged meals contributed to this outcome, despite a noticeable decrease in consumer demand.
Shares of Campbell rose 2% in premarket trading following the announcement. The company is also on track to complete the acquisition of Sovos Brands, the owner of Rao’s, by next year. Campbell reaffirmed its outlook for the full year 2024.
CFRA Research analyst Arun Sundaram commented on the company’s consistent performance, noting the positive aspect of maintaining guidance levels amid market uncertainties.
The past year has seen global staple food makers consistently raise prices to mitigate rising input and labor costs. Campbell reported a 2% increase in average selling prices in its meals & beverages division and a 5% increase in its snack segment, which includes popular brands like Goldfish crackers and Cape Cod potato chips.
Despite these price increases, overall product volumes fell by 5%. Customers are shifting towards more affordable options, such as private-label brands, in response to ongoing inflation.
Campbell CEO Mark Clouse acknowledged the challenges faced by the company’s soup business but also noted recent improvements across all segments, including the Thanksgiving period.
The company’s strategy may require increased promotional activities to regain market share, as evidenced by a 10% rise in marketing and selling expenses.
Campbell’s peers, General Mills and Kellanova, have also reported exceeding sales and profit estimates, benefiting from similar pricing strategies.
Campbell’s net sales decreased slightly by 2% to $2.52 billion, aligning with analysts’ projections. The company achieved an adjusted profit of 91 cents per share, surpassing the anticipated 88 cents.