Campbell Soup Sales Fall On Labor, Supply Constraints

“As expected, our second quarter was challenging as we lapped a difficult comparison and navigated labor and supply constraints, made even tougher by the Omicron surge,” Chief Executive

Mark Clouse

said.

Like other packaged-food companies, the roughly 150-year-old Camden, N.J., company benefited from a surge in demand for food that could be prepared at home in the early days of the pandemic, but it also faced growth challenges.

Now the company is facing surging costs tied to ingredients, packaging, logistics and labor. The company said Wednesday that supply-chain challenges and labor shortages hit its snack and meals-and-beverages segments.

Higher cost inflation as well as other factors led to a 19% drop in operating earnings in the meals-and-beverages business.

That decrease in earnings was partially offset by raising prices, the company said. Still, overall gross margin decreased to 30.3% from 34.4% due to inflation, supply-chain challenges and unfavorable volume mix, the company said.

But the company is beginning to see the labor market improve, and Campbell’s recent price increases should better mitigate inflationary effects this year, Mr. Clouse said. The company reiterated its fiscal 2022 guidance, with Mr. Clouse saying that demand remains strong.

The company said it expects core inflation to be in the low double digits for the full year. Campbell said its January price increases will be fully reflected in the current quarter, and it left the door open to more price increases ahead.

Shares of Campbell rose about 2% in afternoon trading to $43.34 a share.

The company posted quarterly net income attributable to the company of $212 million, compared with $245 million a year earlier. Earnings were 70 cents a share, compared with 81 cents a share in the year-ago period.

Adjusted for one-time items, earnings were 69 cents a share, matching expectations from analysts surveyed by FactSet.