In posting its third quarter results, the company said the slightly colder-than average winter helped boost sales of its core soup lines. It’s not something that the company can plan for, said chief financial officer B. Craig Owens in an earnings call with analysts, but it’s welcome nonetheless. This winter helped make up for the abnormally warm 2012 winter, when consumers’ thoughts were focused on anything but soup.
“It is both hard to predict and to quantify the impact of weather. And frankly, it's not something that we control, so we don't spend a lot of time focused on it. Last year was the more unusual year. It was a very warm winter. This year has actually been slightly colder than normal. So the swing is about an 8-degree swing using the numbers that we have, and it has an impact. I mean, it's undeniable that it has a positive impact,” Owens said.
Hard to predict, hard to plan for
But Owens said that the company tries to nullify the impact of weather in its operational planning, as it can’t be accounted for in any rational way.
“You have to get really granular. In other words, what parts of the country? What population centers? What was the weather change in specific geographies? And when did it occur? It's just not that useful because it's not something that we control.
“We're going to keep our head down and keep working on the things that we do control. And we absolutely do not believe that weather was the primary driver of the improvement that we've seen,” Owens said.
Overall, soup segment sales grew by 14% in the quarter, Owens said. The strong showing helped offset disappointing results in the juice category, where sales of the company’s V8 shelf-stable vegetable juice brand were disappointing.
The bright spot in the sector was results from the company’s acquisition of Bolthouse Farms, which closed one week into the current fiscal year. The Bolthouse line of premium vegetable and juice drinks and smoothies performed well, and the acquisition spurred most of Campbell strong third quarter results. Sales were up 4% overall when excluding the Bolthouse contribution.
“Beverage innovations launched by Bolthouse this spring are exceeding expectations. We believe this has been a great acquisition for Campbell, and we continue to be extremely excited about the platform it provides us to expand in the fast-growing package fresh category,” said Denise M. Morrison, Campbell CEO.
Owens said Campbell continues to look at acquisition targets as a way to become a bigger international player, but has and will continue to take a measured approach.
“There are not a huge number of targets out there, and the targets that are out there tend to be pretty hotly contested. We have a pipeline. You haven't seen us make an international acquisition yet, and that's largely a result of the fact that we're going to be pretty disciplined as we look at these things. Some of them take time because they're family-owned businesses, and it's a matter of building relationships and waiting for the moment when the family is ready to exit and sell,” he said.
Overall, Campbell’s sales topped $2 billion in the quarter. Simple meals sales were up 11% and snack sales grew by 5%, while beverage sales declined by 5%.