Campbell Soup Co raised its annual sales forecast on Wednesday after its quarterly results topped Wall Street estimates, powered by higher prices, improved supply and strong demand for packaged meals and snacks.
The company's shares rose about 1% pre-market after it also lifted the lower end of its 2023 earnings outlook.
While inflation has strained household budgets, Americans are still snacking on Campbell's cookies and salty snacks while a continued preference for cooking at home bolstered demand for its ready-to-eat meals.
'Tough Economic Environment'
Consumers were turning to Campbell's products as a means to stretch their food budgets in the tough economic environment, Clouse chief executive mark said.
A recovery in supply chains also helped Campbell put more products on store shelves and ramp up shipments in its food service segment, boosting second-quarter net sales that rose 12% to $2.49 billion, above Refinitiv estimates of $2.44 billion.
Organic sales in Campbell's snacks division, which represents roughly half of its portfolio, jumped 15% in the quarter, fueled by strong demand for brands including Goldfish crackers, Pepperidge Farm cookies and Kettle Brand potato chips.
Organic Sales Increase
Meanwhile, its Meals & Beverages unit, home to brands such as Campbell's condensed soups, Swanson broth and Prego pasta sauces, saw an 11% rise in organic sales.
While the strong results lived up to expectations, there was likely "still some conservatism being built into the full year", Andrew Lazar, analyst, Barclays said.
Outlook
New Jersey-based Campbell expects fiscal 2023 net sales to rise between 8.5% and 10%, up from its previous growth forecast of 7% to 9%. Analysts on average were expecting an 8.3% jump.
It also projected annual adjusted earnings of $2.95 to $3.00 per share, compared with a prior target of $2.90 to $3.00.
Excluding items, Campbell earned 80 cents per share in the quarter ended 29 January, beating estimates of 74 cents.
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