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Nov 19 (Reuters) - Campbell Soup Co cut its full-year earnings forecast on Tuesday as it fights to lessen its dependence on soup and expand its product offerings in a bid to appeal to 20-somethings.
The world’s largest soup maker also posted quarterly profit that fell far short of analysts’ estimates. Amid competition from private-label brands and smaller rivals, its U.S. soup sales were down 6 percent and drinks sales dropped 8 percent for the first quarter that ended Oct. 27.
Shares in Campbell closed down more than 6 percent on Tuesday. That was the second-worst showing on the S&P 500 after Best Buy Co shares’ nearly 11 percent plunge.
The weak results were a blow to Campbell’s turnaround plan led by Chief Executive Denise Morrison. That strategy includes revamping Campbell’s offerings with new soups and sauces.
Campbell last year bought Bolthouse Farms, which makes refrigerated salad dressings and baby carrots, to appeal to health-conscious consumers.
Executives said on a conference call that food sellers - which would include Wal-Mart Stores Inc - ordered fewer shipments in the latest quarter due to the long time period between Halloween and Thanksgiving. They expected to make up some of the shortfall in the current quarter, and said month-to-date soup sales were up 8 percent excluding discounts.
“Whether (Campbell) could have forecast this impact more accurately is a fair question,” JPMorgan Securities analyst Ken Goldman said in a client note.
On the heels of the profit miss, Campbell cut its full-year adjusted earnings forecast to between $2.53 and $2.58 per share from a previous forecast of $2.55 to $2.60.
“This was a disappointing quarter by almost any read,” Goldman said.
Both he and KeyBanc analyst Akshay Jagdale said they were surprised the company did not cut its forecast even more.
After several seasons of weak soup sales, the seller of Prego pasta sauces and Pepperidge Farm cookies is trying to move away from its traditional business and into fast-moving perishable goods.
It also has stepped up its advertising.
First-quarter net earnings attributable to the company fell to $172 million, or 54 cents per share, from $245 million, or 78 cents per share, a year earlier.
On an adjusted basis, it earned 63 cents per share, far below analysts’ average estimate of 86 cents.
Net sales fell almost 2 percent to $2.17 billion, below Wall Street’s average forecast of $2.29 billion.
Sales in the U.S. simple meals business, which includes soups and sauces, were down 4 percent to $860 million.
U.S. soup sales dropped 6 percent, with the biggest declines in canned soup and microwavable soup. The company did not give the value of sales for the quarter.
U.S. beverage sales, which include V8 vegetable juices, which has not found an audience among younger consumers, declined 8 percent to $173 million.
Campbell’s shares closed down $2.61 to $39.20 in regular trading on the New York Stock Exchange. (Reporting by Aditi Shrivastava in Bangalore and Lisa Baertlein in Los Angeles; Editing by Joyjeet Das, Ted Kerr, John Wallace and Bob Burgdorfer)