For the period ended Oct. 28, Campbell earned $270 million, or 71 cents a share. That was down from $291 million, or 74 cents a share, when results were boosted by a $22 million gain from discontinued operations.
The earnings for the latest period were a penny below Wall Street's expectation, according to Thomson Financial.
The maker of V8 juice and Pepperidge Farm cookies said sales rose to $2.3 billion from $2.15 billion the prior year, topping analysts' average estimate of $2.25 billion. Higher volumes add 4% to sales, while currency gains contributed 3%.
The bottom line took a hit, however, from a drop in gross margin to 41.5% from 42.6% the year earlier.
"Overall, the company's gross margins were negatively impacted in the quarter primarily due to higher cost inflation, which was not sufficiently offset by our pricing actions," said President and Chief Executive Douglas Conant.
Soaring commodity costs, particularly among dairy products, have been hitting food and beverage giants ranging from
. Campbell said it plans to boost its margin performance during the year through a combination of price increases and productivity improvements.
The company till expects fiscal 2008 earnings per share growth of 5% to 7%. Based on the prior year's adjusted earnings of $1.95, the forecast implies a profit of $2.05 to $2.09 a share for the current year.
Analysts predict earnings of $2.10 for the year, according to Thomson.
Campbell also expects sales growth in excess of its long-term target range of 3% to 4%, due in part to a 53rd week of sales in the year.
Shares of Campbell recently were down 38 cents, or 1.1%, to $34.88.