The company on Friday reported a 2% drop in organic net sales in its second quarter saying that a company it described as a “key customer” in North America had placed fewer orders for its namesake canned soups. While Campbell’s CEO Denise Morrison did not identify Walmart by name, Wall Street analysts pointed to the companies’ inability to agree on how to promote Campbell’s soups in its stores. Walmart, the largest U.S. grocer by far with $165 billion in annual food sales, has been ramping up its own brands while reducing inventory of name brand items in its stores.
Shares were down 3% in early trading.
Morrison hinted in a statement that a thaw with Walmart could be coming. “We are making progress with this customer and expect sales declines in soup to moderate in the second half,” she said. Campbell has been looking to offset such soup declines that have going on for years (and fell 7% in the last quarter) with new product innovations, including plant-protein milk and a bigger push of its Garden Fresh Gourmet products. Campbell caught a break from its Pepperidge Farm Snacks business but many newer initiatives bombed.
“This was a disappointing quarter,” Morrison conceded. Sales of Campbell’s fresh food products, which include Bolthouse Farms juice, didn’t do much better than the namesake soups. That has prompted Campbell to shift some of its focus to snacks: in December, it announced it would buy Snyder’s Lance, maker of Cape Cod potato chips and Snyder’s pretzels, for $6.1 billion in its biggest deal ever.