Updated from 9:44 a.m. EST with stock price
Campbell Soup (CPB) on Friday reported weaker-than-expected revenue for the fiscal second quarter, hurt by declines in its fresh unit, which includes Bolthouse Farms juices and Garden Fresh Gourmet. The stock was down 6.91% to $58.23 in mid-afternoon trading today.
Second-quarter revenue of $2.17 billion fell short of analysts' estimates of $2.22 billion. Sales in the fresh segment dropped 8% to $260 million. But adjusted earnings of 91 cents per share topped analysts' projections of 88 cents per share.
"I am not satisfied with our sales performance this quarter," CEO Denise Morrison said in a statement.
Declines were most prominent in the Campbell Fresh division, driven by a market share decrease and weather-related issues in carrots, capacity constraints from the Bolthouse Farms Protein PLUS recall last June and Garden Fresh Gourmet, Morrison added.
The Camden, N.J.-based food company voluntarily recalled about 3.8 million Bolthouse Farms protein drinks last year after receiving consumer complaints, including reports of illness.
Campbell fresh performance was below the company's expectations and the unit's new management team has conducted an extensive review of the business. They have determined that recovery will take longer to execute than planned.
"As a result, we no longer expect C-Fresh to grow this fiscal year," Morrison said. The fresh unit is an "important strategic" business for Campbell to meet growing consumer demand for fresh goods and interest in health and well-being.
V8 shelf-stable beverages declined during the quarter, but the company is "encouraged" by the positive momentum in its core U.S. soup, simple meals and Pepperidge Farm snacks businesses.
For fiscal 2017, the company maintained earnings per share guidance of $3.00 to $3.09 versus the FactSet consensus for earnings of $3.09 per share. Campbell sees $300 million in cost savings by the end of fiscal 2017 and also increased its cost savings target to $450 million by the end of fiscal 2020.
More than 3.89 million of the company's shares traded so far today vs. its average 30-day volume of 1.51 million shares.
Meanwhile, fellow consumer foods company General Mills (GIS) cut its sales and earnings outlook for fiscal 2017 this morning. The stock slumped 3.8% to $59.20 in mid-afternoon trading today.
Full-year organic net sales are now expected to fall about 4% versus its previous outlook for a decline of 3% to 4%. The new guidance is primarily due to the widening gap between the company's promotional activity and that of competitors in the U.S. yogurt and soup categories.
Adjusted earnings are projected to rise between 5% to 7% in constant currency in fiscal 2017, compared to a prior forecast for growth of 6% to 8%.
More than 7.17 million of the company's shares changed hands so far today compared to its average 30-day volume of 2.63 million shares.