Shares of Campbell Soup Co. slid more than 12% Friday to their lowest level since January of 2013, after the company announced the immediate departure of chief executive Denise Morrison and said it would conduct a full review of its entire portfolio amid struggles with fresh food and soup.
“We will undertake a thorough and critical review of all aspects of our strategic and operating plans including the composition of our entire portfolio,” interim CEO Keith McLoughlin told analysts on the company’s earnings call, according to a FactSet transcript. “That work will inform our capital allocation and resource deployment priorities. Everything is on the table. There are no sacred cows.”
The company CPB, -12.06% posted a net loss of $393 million, or $1.31 per share, for its fiscal third quarter, after income of $176 million, or 58 cents per share, in the same period last year. Adjusted EPS came to 70 cents, ahead of the FactSet consensus of 60 cents. But revenue totaled $2.125 billion, slightly below the FactSet consensus of $2.130 billion.
Campbell Soup has suffered three straight years of declining sales after a push toward fresher foods through a series of acquisitions led by Morrison failed to gain traction. A dispute with a major customer about a soup promotion, later revealed to have been Walmart WMT, -0.97% , dented soup sales last year.
Campbell Fresh, which includes Bolthouse Farms beverages, salad dressings and carrots, Garden Fresh Gourmet salsa, hummus and dips and fresh soup, was hit by higher-than-expected cost inflation this quarter, mostly higher transportation and logistics costs.
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The company lowered its earnings guidance, and now expects 2018 adjusted EPS to fall 5% to 6% to $2.85 to $2.90, pushed down by the $6.1 billion acquisition of snacks company Snyder’s Lance, which closed in the quarter. The previous guidance was for an adjusted EPS decline of 1% to 3%.
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Chief Financial Officer Anthony DiSilvestro said the acquisition is the company’s biggest ever and will “meaningfully” shift the portfolio toward the faster-growing snacking category. “On a pro forma basis, snacking will become almost one half of our portfolio of sales,” he told analysts.
However, the deal was expensive and the company took on debt to fund it, which it now has to service. DiSilvestro said the company expected to use cash to reduce...