Campbell’s beat quarterly expectations in Q2, posting fiscal second-quarter net income of $232 million USD, as it hiked ad spend considerably.
Marketing and selling expenses increased 10% to $217 million USD, up from $197 million USD in the same quarter in the previous year, now representing approximately 9% of net sales. The increase was driven by higher advertising and consumer promotion expense – which increased 17% versus moderated levels in the prior year – and higher selling expenses, partially offset by increased benefits from cost savings moves.
“We are successfully reinvesting in our brands and strengthening our supply chain,” noted CEO Mark Clouse in Wednesday morning’s earnings call.
Meals & Beverages
Net sales increased 10% for the quarter. Organic net sales increased 11% primarily due to increases in U.S. retail products, including soup and Prego pasta sauces.
Italian sauce “remains very relevant” in the current retail environment and benefits from value-seekers, Clouse says, as consumers are turning to value-driven meals in an inflationary environment.
Campbell’s is growing share in tomato, chicken noodle, cream of chicken soups, growing dollar share by one point, driven by multi-packs. Condensed cooking SKUs are also growing share as recipe-based marketing is driving increased relevance, Clouse notes. Chunky soups had share gains too, the sixth consecutive quarter that brand has gained dollar share.
Snacks
Campbell’s snacks division has “outstanding momentum,” Clouse points out, and it has stepped up share growth in cookie, cracker and salty snacks.
Net sales, both reported and organic, increased by 15%, driven by sales of “power brands” like Goldfish and Kettle Chips, which were up 20%.
Goldfish, Clouse maintains, is “the star of the snacks business.” It is experiencing 21% consumption growth, Clouse notes. Consumers are also twice as likely to purchase limited-time flavours and product innovations alongside conventional Goldfish items.
