Bolthouse, Plum hot spots in tepid earnings report from Campbell Soup

Campbell reported that overall net sales increased in its third quarter of 2014 by 1%, only half of what it had expected.  Particularly hard hit were the company’s core soup brands, which stagnated, and Pepperidge Farm brands and beverages offerings, which saw sales declines.  But Plum Organics sales grew by 4%, and Bolthouse did even better, with sales up by 6%.  For the quarter, Campbell Soup reported $1.97 billion in net sales, and lowered its full year guidance to 3% sales growth.

Macroeconomic factors​

CEO Denise Morrison cited several factors for the disappointing peformance, among them declines in food stamp support, rising energy prices and persistent underemployment in the consumer segments most attached to the company’s core brands. Particularly hard hit were sales of savory crackers aimed at adults, she said.  The company’s frozen business was also disappointing, pointing to a move toward refrigerated offerings in teh marketplace, she said. By contrast, Plum and Bolthouse appeal to a demographic that finds itself in somewhat more comfortable circumstances.

“These factors are significantly affecting purchasing behavior, pressuring the performance of a number of our key customers and constraining growth across the industry, particularly in center store categories,”​ Morrison said in an earnings call with analysts that was transcribed by Seeking Alpha.

Bolthouse, acquired in 2012 by Campbell Soup for $1.55 billion, specialized in baby carrots, but has more recently diversified into super-premium juices, smoothies, protein shakes and café beverages, refrigerated yogurt dressings and extra virgin olive oil vinaigrettes.  That development continues, Morrison said, with the introduction of 47 new Bolthouse products in the spring, including stone fruit and root vegetable juices to Greek yogurt salad dressings.

As for Plum, the acquisition helped Campbell Soup enter a new category, Morrison said.

“Our acquisition of Plum Organics enabled us to enter the fast growing organic segment of the U.S. baby food category. In the second half we expected Plum to show improvement with the full product range back in supply expanding distribution and introducing several new products, it has done so,​” she said. 

New M&A targets​

Campbell also completed the acquisition of Kelsen, a Danish snack food company that had significant business in China, in late 2013.  While the company is still in the midst of integrating the acquisitions, that won’t prevent it from keeping its eye out for more, Morrison said.

“We have been making plans and investments in our core business and these three acquisitions that we made have been very, very good for our portfolio and, yes, we will continue to look for other acquisitions with smart external development that make good strategic sense,”​ she said.