CAMDEN, NJ. – Continued elevated demand for prepared foods, beverages and snacks at retail drove the Campbell Soup Co. during the second quarter of fiscal 2021. While the market environment was positive during the quarter, results were hindered by staffing and supply chain constraints.
“Nearly 75% of our portfolio held or increased share in the second quarter versus the prior year,” said Mark A. Clouse, president and chief executive officer, during a March 10 conference call with analysts. “This included meaningful share improvement in key focus areas like ready-to-serve soup, Prego and Snyder’s of Hanover pretzels, with continued momentum on condensed soup, V8, our salty snacks portfolio and Goldfish.”
Net income for the quarter ended Jan. 31 was $245 million, equal to 80¢ per share on the common stock. The year prior the company earned $1.2 billion, or $3.97 per share. The sharp gain in fiscal 2020 was due to the divestment of several international businesses.
Sales for the quarter rose 5% to $2.28 billion.
“Net sales were tempered by continued foodservice weakness following a resurgence of COVID-19 cases in December, which led to greater away-from-home restrictions as well as some supply constraints given these cases led to increased absenteeism rate in our plants during the month,” Mr. Clouse said.
Meals & Beverages business unit sales were $1.3 billion, up 6% when compared with the same period of the previous year. The soup category was an area of particular strength.
“US soup sales grew 10%, with strength across all categories,” Mr. Clouse said. “This was fueled by more than one-third of the end market consumption growth coming from new buyers. The number of retained soup buyers in this quarter is the highest since the pandemic started almost a year ago.
“Our condensed soups were once again the highlight of the quarter, with double-digit net sales growth and continued share gains, especially among millennials. With a 0.7 share increase, condensed had its eighth consecutive quarter of share gains, an amazing run that started well before the pandemic. This performance was driven by our quality improvements, strong advertising and the retention of the new households.”
The V8 line of beverages delivered its fourth straight quarter of share and household gains, Mr. Clouse said.
“Notably in Q2, these gains were across all sub-brands of the business,” he said. “And we saw new households coming into the V8 portfolio, driven by both V8 original and V8 + Energy. Overall, Meals & Beverages delivered a strong quarter, as it continued to drive relevance with its brands to a younger consumer base and delivered share gains in many of its key categories.”
Snacks business unit sales rose 4% during the quarter to $979 million. The sales gains were propelled by the Kettle, Late July, Cape Cod, Pop Secret and Pepperidge Farm brands.
“Our performance was again fueled by our power brands, which grew dollar consumption by 8% over the previous year,” Mr. Clouse said. “Within the power brands, our salty snacks brands grew dollar consumption by double digits and realized share growth.”
The Pepperidge Farm Farmhouse line grew dollar consumption by 41% and household penetration by 1.5 points, according to the company.
“On Goldfish, we improved our performance according to the plan we outlined last quarter, returning to growth in net sales and improved dollar consumption,” Mr. Clouse said. “We adapted marketing content during the holidays, with digital partnerships focused on new ways for the consumer to enjoy Goldfish, such as movie night snack mixes or classic lunch combinations with Campbell’s tomato soup, all leading to positive engagement metrics and increased purchase intent.”
For the rest of fiscal 2021, the Campbell Soup Co. is guiding a net sales decline of 2.5% to 3.5%.
“Excluding the impacts from the 53rd week in fiscal 2020 and the impact of the European chips divestiture, we expect organic net sales to decline 1.5% to 0.5%,” said Mick J. Beekhuizen, chief financial officer. “We expect adjusted EBIT of minus 1% to plus 1%, as we will lap the initial COVID-19 demand surge in the second half of our fiscal year, combined with headwinds from increased promotional activity, partially offset by lower year-over-year COVID-19-related expenses and last year's onetime marketing investments.”
The power outages in Texas also will affect the company during the third quarter. The company’s plant in Paris, Texas, which produces Pace and Prego sauces, experienced about two weeks of disruption due to the winter storms and some supply challenges.
For the first six months of fiscal 2021, Campbell Soup earned $554 million, equal to $1.83 per share, compared with $1.37 billion, or $3.44 per share, the year before.
Sales for the period were $4.6 billion, up from $4.4 billion the year prior.