Campbell Soup reported Wednesday that it swung to a loss in the fourth quarter, blaming the results in part on the “disappointing” performance of its fresh food business.
The company has diversified into fresh foods to offset the decline of its iconic canned soups and other packaged foods. Campbell Fresh includes refrigerated soups and the Bolthouse Farms’ lineup of fresh carrots, “super-premium” beverages and salad dressings.
But in the fourth quarter, the division’s sales fell 5% in the quarter to $223 million, reflecting lower sales in carrots and carrot ingredients, as well as in Bolthouse Farms premium refrigerated beverages.
Overall, Campbell Soup lost $81 million, or 26 cents a share, compared with a year-earlier profit of $17 million, or 5 cents a share. Sales edged down 0.4% to $1.69 billion.
“I am not pleased with the results of our fourth quarter,” Campbell CEO Denise Morrison said in a news release. “The performance of our Campbell Fresh business, driven predominantly by execution issues, is disappointing.”
Investors weren’t pleased either, driving the company’s stock down 6.3%, to $56.91, in trading Wednesday.
“Some Wall Street analysts have questioned Ms. Morrison’s attempt to get in on the fresh-food fad because those businesses, especially Campbell’s carrot business, are significantly less profitable than selling shelf-stable foods like soup,” The Wall Street Journal noted.
Campbell’s soup and V8 juice division’s fourth-quarter sales were unchanged from a year ago, at $842 million, but profit increased 4% to $191 million. Campbell Fresh’s profit dipped 62% to $8 million.
Morrison, nevertheless, defended her strategy, insisting Campbell’s refrigerated salad dressings, fresh soups and protein drinks are a valuable toehold in the growing market for foods that connote health and wellness.
“We remain confident in our Campbell Fresh strategy and its ability to deliver long-term growth consistent with its portfolio role, as the business remains well-positioned to capitalize on the health and well-being consumer trend,” she said.
The company said it had corrected problems in its manufacturing equipment and process that led to protein drinks being spoiled and then recalled.