(Reuters) -Campbell Soup edged past market estimates for quarterly sales and profit on Wednesday and stuck to its annual forecasts, helped by steady demand for branded, ready-to-eat meals and strength in its food service business.
Prices across Campbell’s products rose 1%, while overall volumes dipped 2% during the reported quarter, as holiday promotions encouraged shoppers to indulge in its Goldfish crackers and Pepperidge Farm cookies.
The pace of price increases has slowed from last year’s mid-double-digit rise, as most food companies try to limit pricing to cope with subdued demand.
Packaged foods peers Kraft Heinz, Mondelez, McCormick, Hershey and PepsiCo have all flagged softer volume growth in their latest quarterly results.
Still, benefits from prior price hikes and easing supply chains helped Campbell’s gross profit margin climb 31.6%, from last year’s 30.5%.
Net sales in its Meals & Beverages segment – Campbell’s biggest revenue churner – declined 2%, owing to weaker demand for retail products in the U.S., including ready-to-serve and condensed soups as well as Pace Mexican sauces. Sales in the Snacks division were flat in the quarter.
The company, which is set to close its buyout of Rao’s sauce maker Sovos Brands next week, posted second-quarter net sales of $2.46 billion, slightly above analysts’ average estimate of $2.44 billion, according to LSEG data.
It logged adjusted earnings of 80 cents per share, better than the 77 cents analysts were expecting.
The New Jersey-based firm reaffirmed its fiscal-year 2024 target for net sales and earnings for the second time in a row.
Shares of the company were down marginally in trading before the bell.
(Reporting by Savyata Mishra in Bengaluru; Editing by Pooja Desai)
