(Reuters) - Campbell Soup Co (CPB.N) raised its 2020 outlook after beating expectations for third-quarter results as consumers stocked up on soup and sauces during the pandemic.
Campbell’s shares, which have outperformed the S&P 500 index by more than 12 percentage points since the market began falling after February 19, fell 3% on Wednesday, however, after the company discussed troubles it had meeting the surging consumer demand.
Also, Campbell’s implied forecast for the current fourth quarter was shy of Wall Street estimates, said JP Morgan analysts.
Demand for packaged foods soared during lockdowns, as shuttered restaurants forced people to eat more at home.
Campbell expects several pandemic-born trends to continue - quick cooking from scratch, online shopping, a need for more in-store inventory and a focus on value.
The company saw a 6% quarterly increase in the number of households buying its products and said it was working to hold on to new consumers with increased marketing.
In its namesake soup business, U.S. quarterly sales rose 35 percent, but Campbell’s market share was hurt by being out of stock at times.
“We didn’t get everything perfect in regard to product availability,” Campbell said in a transcript of a presentation on its website. It expects to be in a stronger position over the next couple months, as demand eases and summer approaches.
If consumer demand remains unusually elevated, that may take longer, it said.
Campbell Soup shares have previously outperformed peers reut.rs/3dxuKTB in crises, during the 2008 recession and in the aftermath of the Sept 11, 2001 attacks.
The maker of Prego pasta sauce and Goldfish crackers raised its fiscal 2020 forecasts to $2.87 to $2.92 for adjusted earnings per share and 5.5% to 6.5% for net sales growth.
Net sales were $2.24 billion in the third quarter, ended April 26, beating estimates of $2.22 billion.
Excluding one-time items, Campbell earned 83 cents per share, compared with analysts’ average expectation of 75 cents, according to IBES data from Refinitiv.
Shares were down 2.7 percent at $50.62.
Reporting by Praveen Paramasivam and Martinne Geller; editing by Uttaresh.V, Shinjini Ganguli and Nick Zieminski