Campbell Soup (CPB) on Tuesday reported better-than-anticipated earnings for the 2017 fiscal first quarter, but the company's fresh foods segment continues to struggle. The stock rose 3.58% to $57.01 in midday trading today.

Before the market open, the Camden, NJ-based food company posted adjusted earnings of $1.00 per share, surpassing analysts' estimates of 95 cents per share. Revenue was $2.20 billion, matching Wall Street forecasts.

Organic sales declined 1% year-over-year, hurt by its Campbell fresh segment, which includes better-for-you brands such as Garden Fresh Gourmet and Bolthouse Farms. In June, the company voluntarily recalled about 3.8 million protein drinks after receiving consumer complaints including reports of illness.

"Campbell Fresh continues to rebuild capacity for Bolthouse Farms Protein PLUS drinks following a voluntary recall last quarter, and remains focused on working to regain lost carrot customers over time with improved quality," CEO Denise Morrison said in a statement.

Sales in the segment dropped 6% to $234 million from last year driven by lower sales of Bolthouse Farms refrigerated beverages and carrots. This was partly offset by gains in refrigerated soups. Segment operating earnings fell to $1 million from $18 million due to increased carrot and beverage supply chain costs and lower sales volumes.

The fresh unit is a "strategically important" business as it addresses the key consumer trend toward fresh foods, health and well-being and its brands resonate with millennials, Morrison noted this morning on the quarterly conference call.

Morrison said she is "optimistic" about plans to accelerate growth with trends in U.S. soup improving, continued strong performance in its Pepperidge Farm brand and a return to growth in Campbell fresh.

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