NEW YORK (TheStreet) -- The struggles of the packaged food industry may not go away anytime soon. Weak sales volumes and lower margins are real impediments to growth. April retail sales data show consumers are not spending as much on goods as the market hoped.
Nonetheless, that hasn't stopped investors from warming up to Campbell Soup (CPB), whose shares are up more than 6% year to date.
Not only has CPB bested the broader market, the stock has also outperformed the 4.5% gains in the packaged food sector. But Campbell is just getting started. More gains are on the way.
Headquartered in Camden, N.J., Campbell will report fiscal third-quarter earnings results Friday, May 22, before the opening bell. The company best known for its soups, Pepperidge Farm snacks, V8 products and Spaghettios, has fed consumers for almost 100 years. Campbell must now convince it can serve investors more profits in the years ahead.
To do that, the company needs to shore up its margins, which -- as with most packaged-food companies -- have been under pressure. Last quarter, the 310 basis-point margin decline, which was 32.6% of sales, negatively impacted the bottom line.
Campbell was able to offset the cost inflation by lowering its own input costs and expenses. Marketing and selling expenses were down 10% year over year to $242 million, which lead to earnings coming in at 66 cents per share, matching analysts' estimates last quarter. Remarkably, this was achieved even as revenue declined more than 2%, to $2.23 billion.