Campbell's reports Q3 2021 results; rising supply chain costs contribute to headwinds

Camdem, NJ-based Campbell Soup Co. (NYSE:CPB) this week reported results for its third-quarter fiscal 2021, ended May 2. Net sales decreased 11% to $1.98 billion and organic net sales decreased 12%.

Sales declines, the company said, were a result of "lapping unprecedented demand of food purchases for at-home consumption at the onset of the COVID-19 pandemic in the prior-year quarter."

ADDITIONAL KEY POINTS:

• Earnings before interest and taxes (EBIT) were $272 million, comparable to prior year. Adjusted EBIT decreased 27% to $283 million.
• Earnings per share (EPS) from continuing operations decreased 2% to $0.54. Adjusted EPS decreased 31% to $0.57.
• Nearly 75% of brand portfolio grew or held share highlighting strong brand health and continued momentum.

Mark Clouse, Campbell’s president and chief executive, said, “While we recognized the third quarter would be a challenging net sales comparison to the demand surge at the onset of the COVID-19 pandemic a year ago, we faced additional headwinds. Our results were impacted by a rising inflationary environment, short-term increases in supply chain costs, and some executional pressures as we continued to advance our transformation agenda, primarily in our snacks division."

Campbell's gross margin decreased to 31.7% from 34.5% last year. Excluding items impacting comparability, adjusted gross margin decreased 290 basis points to 31.8% as higher cost inflation and other supply chain costs, as well as unfavorable mix and reduced operating leverage were partially offset by a net benefit from the change in mark-to-market adjustments on outstanding commodity hedges, supply chain productivity improvements and cost savings initiatives.