Campbell’s Co. cut its profit outlook to the lowest in a decade as consumers eschew chips and pretzels while supply constraints are weighing on sales of freshly baked goods.
Full-year earnings, adjusted for some items, are now seen between $2.15 to $2.25 per share, below the prior range of $2.40 to $2.55, according to a Wednesday statement. That’s set to be the lowest profit since 2009.
Shares fell as much as 7.8% before the bell and are trading down 5.2% as of 8:20 a.m. in New York.
The group’s Snacks division missed expectations in the second fiscal quarter, “primarily driven by declines in chips and pretzels, supply constraints related to fresh bakery and third-party partner brands and contract manufacturing.”
That weighed on overall results, prompting the company to step up cost saving measures, including $100 million in additional near-term overhead reductions and a suspension of all share repurchases.
A January storm also weighed on its main Meals & Beverages unit by disrupting supply chains, though results would have still missed expectations without the storm impact, RBC analyst Nik Modi said in a note.
Second-quarter results missed the average analyst estimate in both units, and adjusted profit recorded its steepest decline since earnings began contracting five quarters ago.
Written by: Ignacio Gonzalez @Bloomberg
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