(Reuters) -Campbell Soup surpassed Wall Street expectations for quarterly profit on Wednesday, benefiting from higher prices for its packaged meals and snacks that helped offset a slowdown in demand from cost-conscious consumers.
Shares of Campbell, which expects to complete the acquisition of Rao’s owner Sovos Brands by next year, rose 2% premarket, after it also reaffirmed its full-year 2024 outlook.
Global producers of staple food have consistently bumped up product prices over the past year to counter higher input and labor costs, even as some of the expenses like those linked to supply chain have now come down from their peaks.
Average selling prices in Campbell’s meals & beverages division, which also includes soups, rose 2% in the first quarter, while prices for its snacks brands – including Goldfish crackers and Cape Cod potato chips – increased by 5%.
However, overall volumes dropped 5% as customers have chosen to switch to cheaper alternatives such as private-label brands at retailers amid persistent inflation, causing a decline of 10 basis points in adjusted gross margins to 32.1%.
Industry peers such as General Mills, Kellanova and Hershey have also seen demand waver for their products in recent months even as elevated pricing has helped them top quarterly estimates.
Net sales at Campbell dropped 2% to $2.52 billion in the first quarter, in line with analysts’ average estimate, according to LSEG data.
Excluding items, the company earned 91 cents per share, beating analysts’ estimate of 88 cents.
(Reporting by Granth Vanaik in Bengaluru; Editing by Krishna Chandra Eluri)
