By Paul Ziobro
A trio of food makers posted mixed quarterly results Friday, as
Campbell Soup Co. (CPB) and J.M. Smucker Co. (SJM) eked out some
sales growth, while Kraft Foods Group Inc. (KRFT) saw sales plunge
amid some stumbles related to its recent spinoff from Mondelez
International Inc. (MDLZ).
The results from Campbell--whose fiscal second-quarter sales,
excluding a recent acquisition, rose 1%--and Smucker--whose fiscal
third-quarter sales rose 2% excluding a recent purchase--reflected
how the makers of brand-name foods are clawing their way back from
sales volumes that fell over the past year after steep rises in
commodity costs forced companies to raise prices. Campbell's sales
volume was flat in the period, helped by a double-digit percentage
increase in sales of its line of Chunky soups that rose after the
company improved recipes, changed the label and restarted
advertising tied to the National Football League.
Smucker, meanwhile, posted a 1% volume decline, an improvement
from the previous quarter, but sold more products in two of its top
business: coffee and peanut butter. Smucker may ring up more sales
of both Folgers coffee and Jif peanut butter in the current
quarter, especially after a 10% price cut on peanut butter last
month and a planned price cut on coffee in the coming weeks.
Investors are watching closely to see signs that food makers are
selling more of their products to show that shoppers still have the
stomach to pay for products at higher prices. Time may help get
consumers used to higher prices, as does--in the cases of coffee
and peanut butter--lowering prices and adopting new marketing
strategies.
But Smucker noted it is also a sign that consumers are feeling a
little bit better when they head to the supermarket. "We are seeing
the consumer be a little more confident and spending a little bit
more," Smucker Chief Executive Richard Smucker said.
Kraft faced a more-troubling quarter, with organic revenue--a
measure that reflects the company's comparable sales excluding
foreign-exchange translation--down 7.2%, a decline deeper than the
company expected. The decline occurred as retailers worked through
inventory they built up before Kraft's October spinoff from
Mondelez, maker of Oreo cookies and other snacks, which kept them
from placing new orders.
Kraft's sales also took a hit as it tried to scale back some
promotional activity. One of its retailers, which it didn't name,
was ramping up its low-price offerings and Kraft's products didn't
fit well with the strategy during the December holiday season.
"We definitely stubbed our toe this quarter," Kraft Chief
Executive Tony Vernon said.
Kraft, which said year-end inventory levels at retailers had
reset to normal levels, backed its sales outlook for 2013. The
company also adopted a mark-to-market accounting policy for its
post-employment benefit obligations, a change that that allowed it
to raise its guidance for the year.
Shares of Smucker, which raised the low-end of its full-year
earnings outlook, rose 0.9% to $92.99 after hitting an all-time
high of $94.99 earlier. Campbell shares rose 1.5% to $39.30, as
earnings exceeded expectations. Kraft shares were flat in recent
trading at $47.16.
Write to Paul Ziobro at paul.ziobro@dowjones.com.
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