By Thursday, investors had a chance to react to the earnings report issued by Campbell Soup (NYSE: CPB), but don't let the company's name fool you. They aren't only a soup company anymore. After today's earnings report however, shareholders were likely wishing that soup was the only business they were in.
After the close on Wednesday the company reported earnings and their new venture into fresh produce doesn't seem to be going very well. For the most recently completed quarter, Campbell Soup announced that they had earned $0.46 cents per share on $1.69 billion in revenue. Sales were in line with estimates, and mostly in line with levels last year at this same time. The bottom line, however, fell short of the expected 50 cents per share of CPB, and were down 6% from year-ago levels.
They may be healthy to eat, but are proving to be unhealthy to CPB.
So whats caused the problem then? Carrots! The company said that carrots were a big factor in its fourth quarter issues. The company's "Fresh" division, which sells a variety of produce and packaged-produce goods, saw a 5% dip in sales as supply issues hurt the division. Campbell Soup announced that they put an impairment charge of $141 million on the books to reflect the struggles it has met following its 2012 purchase of Bolthouse Farms, which got it into the produce game in the first place.
This didn't sit well with investors as they sold off shares of the stock all morning long and into the close. Shares traded sharply lower today, closing Thursday's session down 6%. Volume was well above average and the selling pressure was consistent.
So, going forward you would think the company would have a singular focus, to fix the fresh division and prove to investors that they have it dialed in. Unfortunately, numbers tell the truth and its likely it will be next quarter before CPB wins back the trust of the investor.