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Inventory Cycling, Supply Chain Pressure Lead to Campbell Soup Company (CPB) Earnings Miss

Wednesday, December 08, 2021 09:46 AM | Kyle Depontes
Inventory Cycling, Supply Chain Pressure Lead to Campbell Soup Company (CPB) Earnings Miss

Campbell Soup Company (CPB) stock is flat today after the New Jersey-based company, which owns brands such as Pepperidge Farm and Snyder's of Hanover, announced earnings for the first quarter of its fiscal year.

Net sales decreased 4% year-over-year to $2.2 billion, while Earnings Before Interest and Taxes (EBIT) declined 18% to $376 million.

Adjusted EPS decreased 12% to $0.89.

Inventory Cycling

Mark Clouse, Campbell’s President, and CEO, pinned the dismal quarter on a topline that was tempered by "the expected cycling of year ago retailer inventory replenishment and some industry-wide supply chain disruptions."

Although pricing and sales allowances had a favorable 4% impact on net sales, this was offset by a 6% decrease in volume and mix as a result the company cycling retailer inventory recovery.

The company's inventory cycling or its supply chain pressure did not affect its fiscal year 2022 guidance, which remains unchanged from estimates given in its September 1st announcement.

Supply Chain Constraints

Among Campbell's product categories, organic net sales decreased 6% as favorable prices in the quarter were offset by volume declines across U.S. retail products, including V8 beverages, Prego pasta sauces, and U.S. soup.

The changes were partly due to Campbell's cycling its inventory, but also the result of supply constraints.

However, Clouse stated, "We expect the steps we are taking to continue to address labor challenges, drive net price realization and improve productivity will lead to solid year-over-year earnings growth in the second half allowing us to maintain our full-year fiscal 2022 guidance.”

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