Campbell Soup Co. warned on Thursday of a bigger pinch for consumers in the coming year from recent price rises and said its older customers were seeking cheaper store-brand options over its soups and broths amid a rise in cost of living.
Shares of the more than 150-year-old U.S. company fell about 4 percent after it also forecast full-year profit largely below estimates on supply chain snags and soaring costs.
Multiple prices increases by companies struggling with higher costs of labor, ingredients and transportation, coupled with rising borrowing costs, have squeezed household budgets and encouraged consumers to hunt for more affordable alternatives..
“We’ve been very focused on which consumers are trading down within soup, and they tend to be our baby boomer consumers, who historically are a bit more sensitive to price gaps,” Chief Executive Mark Clouse said.
Millennial consumers were still largely sticking with its brand, Clouse added.
Campbell picked out its condensed soup and broth among the products hardest hit by market share losses.
Jif peanut butter maker J.M. Smucker and retailers Walmart Inc. and Dollar General have also signaled some shift in consumer buying habits toward private label products.
Campbell, which reported fourth-quarter net sales and adjusted profit in line with estimates, has also ramped up promotions to better compete with cheaper rivals.
“Promotional activity ticked up this quarter, particularly in Snacks, a sign that the competitive environment is intensifying,” CFRA analyst Arun Sundaram said.
The maker of Prego pasta sauces and Pepperidge Farm cookies expects fiscal 2023 adjusted earnings per share between $2.85 and $2.95, compared to expectations of $2.92.
Net sales for the period is projected to grow between 4 percent and 6 percent, higher than estimate of a 2.7 percent rise, according to Refinitiv data.
