(March 11): Campbell’s Co cut its profit outlook to the lowest in a decade as consumers eschew chips and pretzels while supply constraints are weighing on sales of freshly baked goods.
Full-year earnings, adjusted for some items, are now seen between US$2.15 to US$2.25 per share, below the prior range of US$2.40 to US$2.55, according to a statement on Wednesday. That’s set to be the lowest profit since 2009.
Shares fell as much as 7.8% before the bell and are trading down 5.2% as of 8.20am in New York.
The group’s Snacks division missed expectations in the second fiscal quarter, “primarily driven by declines in chips and pretzels, supply constraints related to fresh bakery and third-party partner brands and contract manufacturing.”
That weighed on overall results, prompting the company to step up cost saving measures, including US$100 million in additional near-term overhead reductions and a suspension of all share repurchases.
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A January storm also weighed on its main Meals & Beverages unit by disrupting supply chains, though results would have still missed expectations without the storm impact, RBC analyst Nik Modi said in a note.
Second-quarter results missed the average analyst estimate in both units, and adjusted profit recorded its steepest decline since earnings began contracting five quarters ago.
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