Speaking to analysts this morning, CEO Denise Morrison said she was pleased with the performance of Pepperidge Farm but disappointed by the performance of soup and beverages in the US: "I'm disappointed in Campbell's first-quarter performance… Given our slow start to the year, we are lowering our fiscal 2014 guidance.”
Several factors were blamed for the slow start, including retailer inventory shifts due to the late Thanksgiving holiday (customers ordered stock later than expected) and the decision to front-load marketing spending on the Bolthouse Farms brand in the first quarter, she said.
"The impact from retailer inventory movements was greater than anticipated and accounted for more than half of the decline in organic sales. This was most acute in US Soup, where retailer inventory movements lowered sales by approximately 4%, or two-thirds of the decline versus prior year.
"Significant shifts in our program timing and execution also pressured results, especially in U.S. Soup.”
Q1 results breakdown: Weak performance from V8 range
Sales in the U.S. Simple Meals division declined 4% to $860m in Q1, with condensed soup sales down 7% and ready-to-serve soups down 11% (primarily due to declines in canned and microwavable soup varieties). However, broth sales were up 3% (primarily driven by double-digit volume gains in aseptic broth), said Morrison.
"We expect our new Campbell Homestyle Soup to be a growth driver this year, and we're accelerating innovation by pushing up the launch of eight new soups that were originally planned for the end of the fiscal year.
"These new soups will now be launched in the second and third quarters, and they include new varieties of Campbell's Chunky and Healthy Request soups and our first Hispanic-inspired cooking soups."
Sales of U.S. Sauces increased 4%, driven by the acquisition of Plum Organics.
Sales in the Global Baking and Snacking division rose 6% to $609m driven by gains in Goldfish crackers and fresh bakery products, she said.
"Going forward, we are supporting the national rollout of Goldfish Puffs with a television and digital campaign. And in Q2, we're launching Goldfish Mac & Cheese nationally."
'V8 V-Fusion + Energy is performing way above expectations'
Sales for International Simple Meals and Beverages were down 13% to $193m, while sales in the U.S. Beverages division slumped 8% to $173m, primarily due to weak sales of V8 V-Fusion beverages, V8 vegetable juice and V8 Splash, which faced “category weakness in shelf stable juices and competition from the proliferation of specialty beverages and packaged fresh juices”, said Morrison.
But she added: "V8 V-Fusion + Energy is performing way above expectations, so we're encouraged by that innovation."
Sales at Bolthouse Farms and Foodservice were up 2% to $330m.