In the second quarter, Campbell Soup is driven by soups and snacks.
During the second quarter of fiscal 2021, Campbell Soup Co. was driven by the persistently high demand for prepared foods, beverages, and snacks at retail. Despite a favorable market environment during the quarter, supply chain and staffing issues limited outcomes.
“During a March 10 conference call with analysts, nearly 75% of our portfolio held or increased share in the second quarter versus the prior year,” stated President and CEO Mark A. Clouse. “This included continued momentum on condensed soup, V8, our salty snack portfolio, and Goldfish, as well as meaningful share improvement in key focus areas like ready-to-serve soup, Prego, and Snyder’s of Hanover pretzels.”
$245 million, or 80¢ per share of common stock, was net income for the quarter that ended on January 31st. The business made $1.2 billion, or $3.97 per share, the year before. The sale of a number of foreign companies was the reason for the significant profit in the 2020 fiscal year.
At $2.28 billion, the quarter’s sales increased by 5%.
Following a return of COVID-19 cases in December, which resulted in tighter limitations on travel and some supply issues because these cases raised absenteeism rates in our plants during the month, Mr. Clouse stated, “net sales were tempered by continued foodservice weakness.”
Sales for the Meals & Beverages business area came to $1.3 billion, a 6% increase over the same time last year. One area that showed remarkable strength was the soup category.
According to Mr. Clouse, “US soup sales grew 10%, with strength across all categories.” More than one-third of the increase in end-market consumption came from new customers, which drove this. This quarter’s retained soup buyer count is at an all-time high since the pandemic began over a year ago.
Once again, our condensed soups were the star of the quarter thanks to double-digit net sales growth and ongoing share increases, particularly with millennials. Condensed achieved its ninth consecutive quarter of share gains, up 0.7 shares. This remarkable streak began far before the pandemic.
According to Mr. Clouse, the V8 beverage brand produced share and household gains for the fourth consecutive quarter.
He stated, “Notably, in Q2, these gains were across all of the business’s sub-brands.” And as a result of V8 original and V8 + Energy, we observed an influx of new families into the V8 portfolio. Meals & Beverages had a successful quarter overall as it continues to gain market share in several of its major categories and make its brands more relevant to a younger demographic.
Sales for the Snacks business unit increased by 4% to $979 million throughout the quarter. The Kettle, Late July, Cape Cod, Pop Secret, and Pepperidge Farm brands drove the sales increases.
“Our power brands, which increased dollar consumption by 8% over the previous year, once again drove our performance,” Mr. Clouse stated. “Our salty snack brands saw share growth and double-digit growth in dollar consumption within the power brands.”
The company claims that the Pepperidge Farm Farmhouse line increased household penetration by 1.5 points and dollar consumption by 41%.
“We improved our performance on Goldfish in line with the plan we laid out last quarter, which included a return to growth in net sales and an improvement in dollar consumption,” Mr. Clouse stated. “We modified marketing content for the holidays, focusing on digital partnerships that offered consumers new ways to enjoy Goldfish—like movie night snack mixes or traditional lunch combos with Campbell’s tomato soup—which all resulted in higher purchase intent and positive engagement metrics.”
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The Campbell Soup Co. is projecting a 2.5% to 3.5% drop in net sales for the remainder of the 2021 fiscal year.
“We anticipate a 1.5% to 0.5% decline in organic net sales, excluding the impact of the European chips divestiture and the 53rd week of fiscal 2020,” stated Mick J. Beekhuizen, chief financial officer. “As we lap the first COVID-19 demand surge in the second half of our fiscal year, coupled with headwinds from increased promotional activity, partially offset by lower year-over-year COVID-19-related expenses and last year’s one-time marketing investments, we expect adjusted EBIT of minus 1% to plus 1%.”
During the third quarter, the corporation will also be impacted by the power disruptions in Texas. The winter storms and certain supply issues caused a two-week disruption to the company’s Pace and Prego sauce production facilities in Paris, Texas.
Campbell Soup made $554 million, or $1.83 per share, in the first half of fiscal 2021 as opposed to $1.37 billion, or $3.44 per share, in the previous year.
Sales increased to $4.6 billion over the time from $4.4 billion in the previous year.