Food Stocks Campbell Soup and United Natural Sink After EPS

Shares in food stocks Campbell Soup (CPB:US) and United Natural Foods (UNFI:US) traded lower on Wednesday after both companies reported underwhelming results for the January quarter.

Campbell’s sales of $2.23 billion only met analyst targets for the company’s third fiscal quarter. Sales in the ‘Meals & Beverages’ business segment underperformed and trailed analyst estimates. 

“Our third-quarter results were in line with our expectations and were driven by in-market momentum, continued best-in-class supply chain execution and favorable inflation-driven net price realization, all despite the anticipated challenging comparison from the prior year's retailer inventory rebuild,” said Campbell's President and CEO, Mark Clouse

Overall, organic net sales rose 5%, ahead of the 4.8% expected by analysts. The adjusted profit per share of $0.68 came in better than the expected $0.65. While the company reaffirmed its full-year fiscal 2023 net sales, adjusted EBIT, and adjusted EPS outlook, the CPB shares still fell about 7% on Wednesday.

Congressman Daniel Goldman disclosed in April that he sold some CPB shares in March while the stock was still trading above $50 apiece.

On the other hand, United Natural Foods shares fell as much as 28% after the company’s new guidance suggested a 70% drop in Q4 Ebitda.

“Our profitability was impacted by a greater than expected decline in gross margins reflecting a challenging operating and macroeconomic backdrop, which contributed to lower inflationary benefits primarily related to reduced procurement gains, as well as higher shrink. Because of this pressure, we are reducing fiscal 2023 outlook for adjusted EBITDA and adjusted earnings per share,” said UNFI CEO Sandy Douglas.

The organic foods company now expects the adjusted EPS to come in the region of $1.80 - $2.30, a significant haircut relative to the prior forecast of $3.05 - $3.90.