Campbell's forecasts annual sales and profit below estimates on weak consumer spending
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FILE PHOTO: Cans of Campbell's chunky beef soup line a supermarket shelf in Bellingham, Washington, U.S. April 25, 2024. REUTERS/Chris Helgren/File Photo
Sept 3 (Reuters) - Campbell's issued annual forecasts below estimates and cut its quarterly dividend by more than a third as it struggles with weak demand for its pricier snacks and pantry condiments, sending its shares down 7% before the bell on Thursday.
The soup maker said it had closed some plants and completed some workforce cuts to support margins as part of a program to save about $500 million in costs by fiscal 2030.
"Our performance is not where it needs to be and we are taking decisive action to improve it," CEO Mick Beekhuizen said.
Lower-income consumers are shifting toward cheaper value brands and store-label products, pressuring sales at companies including Campbell's that have raised prices in recent years to protect their margins.
A 10.75-ounce can of Campbell's tomato soup costs $1.48 on Walmart's website, while a 10.75-ounce tomato soup can from Walmart's private-label brand Great Value costs 70 cents, according to Reuters checks.
Campbell's expects fiscal 2027 net sales to fall between 2% and 4%, compared with analysts' estimate of a 0.8% drop, according to data compiled by LSEG.
However, the company expects fiscal 2027 adjusted profit per share in the range of $1.65 to $1.80, compared with analysts' estimate of $1.86 per share.
The forecast reflects a volatile environment with elevated inflation, but sees benefits that are expected to support margins, Campbell's said.
Net sales fell 8% to $2.14 billion in the fourth quarter, steeper than analysts' average estimate of a 7.6% drop. Adjusted earnings per share of 39 cents were in line with analysts' estimates.
Volumes in the company's snacks segment fell 6%, while prices rose 1%. For its meals and beverages segment, where prices remained the same, volumes rose 3%.
(Reporting by Koyena Das in Bengaluru and Alexander Marrow in London; Editing by Pooja Desai)
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