Campbell Soup Company (NYSE:CPB)
today reported its results for the first quarter of fiscal 2014.
First-Quarter Results Negatively Impacted by Several Factors
- Inventory movements at U.S. retailers and program timing
- Weakness in core business trends
- Front-loaded marketing investments to support new products and build “Bolthouse Farms” brand
- Voluntary recall of a range of Plum Organics pouch products
Denise Morrison, Campbell’s President and Chief Executive Officer, said, “I’m disappointed in Campbell’s first-quarter performance. We are confident in our plans to improve our performance in the remaining three quarters. Given our slow start to the year, we are lowering our fiscal 2014 guidance.
“While we anticipated a challenging first quarter, the impact from retailer inventory movements was greater than anticipated and accounted for more than half of the decline in organic sales. This was most acute in U.S. Soup, where retailer inventory movements lowered sales by approximately 4 percent, or two-thirds of the decline versus prior year. Significant shifts in our program timing and execution also pressured results, especially in U.S. Soup.
“As we stated in August, this year’s late Thanksgiving holiday is pushing shipments into the second quarter. We expect holiday timing to have a positive impact on our second-quarter results. The second quarter is off to a solid start, as we are seeing stronger shipments of soup, broth and stuffing.”
Morrison continued, “Another significant factor impacting our performance was our decision to front-load marketing spending in the first quarter to support new products in U.S. soup and simple meals and to invest in marketing our ‘Bolthouse Farms’ brand. Specifically, total advertising and consumer promotion expense increased 14 percent versus prior year.
“We continued to face challenges in U.S. Beverages and Australia, and we are implementing plans to improve the performance of these businesses. North America Foodservice performed as expected.