CPB - Earnings call transcript Q1 2021

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Campbell’s First Quarter Fiscal 2021 Earnings Presentation. At this time, all participant lines are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference may be recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today, Ms. Investor President, Vice Gardy, Relations. Rebecca begin. Ma’am, you may

Rebecca Gardy

quarter Good presentation. earnings Relations. first President morning, welcome to and fiscal I’m Investor XXXX of Campbell’s Rebecca Vice Gardy,

the will available at of A transcript investor.campbellsoupcompany.com. a replay Following earnings the within investor.campbellsoupcompany.com. this conference XX this and at call of be presentation available the copy will webcast of of completion be the call, hours

estimates Today reflect slide of rely our these we SEC slide will slide Campbell’s results X. Officer, Please the comparable agenda. most included and see Mark directly measures Beekhuizen. measures. we Mick to Financial us of and the appendix CEO; are could call X and President our presentation of to list on our in Clouse, today in factors expectations. a you to Chief forward-looking risks. With on actual On GAAP results division. our will will from this performance quarter. second his which in-market quarter discuss more by will and Turning reconciliation and statements quarter X inaccurate materially statements the Mark current cause These measures, performance assumptions guidance to those anticipated are our share the and first we overall which for the in filings on be make thoughts have for vary financial Because detail or of subject our Mick review forward-looking our the that a statements. to refer could non-GAAP use

to with call the analyst And I’ll that, turn Mark. with over an Mark? close will call We the Q&A.

Mark Clouse

pandemic I for all to first has grateful I in the entire rest protocols. this for producing as welcome head the brought people been like the following our into in-plant our I Good call the plants safety year the to higher to and teams, meet shipping morning, Thanks, our our XXXX. first prioritizing know everyone season. organization, especially and manufacturing of the and would holiday who quarter demand of Campbell we and the am the heightened colleagues best distribution have wish year Rebecca. fiscal our while earnings

Turning results. to the

in saw from press and our profitability execute we environment reported growth continue and plan. a with perspective, key quarter another both in all sales a strong across metrics you strategic As we against our as release, to our volatile

costs, was line combined around growth top up the where EBIT value impact gross holiday the retailers per growth, adjusted adjusted to inventory better-than-expected soup to XX% a strong expansion also in quarter improve going and It despite XX%, to able strong Our crucial we levels EPS related executional $X.XX capture season. increase and margin led with of our ongoing synergies, to COVID-XX share. were supply into a strengthen to allow

quarterly our brands led in growth in approved Board increased & to Beverages, reflecting confidence our as to Organic continued strong our our that attract retailers prospects announced retain the in commitment increase sales we continued long-term addition, also and our returns. reflecting and increasing performance, earnings by company’s In as levels. dividend, in X% Meals household in as a rebuilt X%, our well XX% first new cash shareholder sales growth the inventory flows quarter investment organic

solid drove of majority Snacks reflecting Turning nine the growth sales our to our division, sales X%, across we brands. increases organic up with power

consumption year of help differentiated some from to demand the the make We Beverages as snacks in-home expanded. supply Meals constraints, selective and shift in balance unique rapidly of remained the first particularly to strategic promotions to decisions did portfolio & ease quarter in Our high the division.

our much first accelerating better in are retailer in-market as into is expected, we a as results, quarter holiday the share seeing programming mixed performance season. inventories ramping generate did decisions on these position While exited and key

elevated pressure will of capacity maximize us near pressure continue navigate and that to but availability in this chain are supply help on term, better building and capabilities growing We the expect supply while we demand that and share. protecting

consecutive households household was increase grew October measured in most entire we with back almost from which X%, we month portfolio. increasing the millions XXXX, consecutive performance ninth in-market the the the Continuing in quarter, In of notable versus quarter, consumers. attracted younger total of from across growth dollar company channels, our coming For grew prior year. penetration sixth first momentum the new the our fiscal half with

our We gains elevated to of the rates repeat again. the over see continued household products purchasing with XX% also of pandemic since beginning

we consumer trends calls, retain home on enduring beyond these will cooking And remain As quick and scratch an change be previous we eating in a we snacking, behavior. have we and of like households number consider this meaningful confident to pandemic. strengthening the said that given at

household Meals the with retailer We increased moderated penetration X.X soup reflects overall This segments. in-market soup inventory and points. Within in all & net our promotional activity. sales Beverages, in XX% growth by gains grew recovery,

In core consumers. are rates, addition new demonstrating gaining points these grew repeat sustained nearly for condensed and on on U.S. growth among we reflected total X higher by soup point, as the X.X of businesses to point one by over we new relevance of significant with share retaining Ready-To-Serve, buyers younger millennials buyers, our and including

households cooking sales of million the year. by Our quarter gains SKUs condensed four quarter this share highlight soups led with growth, the versus net new purchasing and double-digit prior in were

to are frequently bring consumers who ideas and cooking at to continue recipes home. We more new

likely more cooks to will well first-time gain more home, continue they prepare use these we to the meals at skills these believe As confidence, beyond pandemic.

pressure in promotions saw in first prior year. consumers to views solid the loss. compared a with supply quarter resonate the moderate Within saw we to previously some we Ready-To-Serve, and short-term growth consumption page but continue in solutions increase XX% mentioned related recipe decision to resulted share overall recipe Our our as as

Well has improved, improved NFL and are relaunch. Slow However, Supported innovation trends. our Yes! Chunky our sponsorship supply seeing Crunch by as we activation, Kettle our

points Foods performed continued to second nearly the household great ever launched evidenced has quarter. have by feel very broth a consumers with soup quarter. success increased Foods and core scale to positive into share Pacific factors well our also as impact we’ve brands. Pacific growth second we these distribution and Win we the Overall, new XX% expanding progress in all about of dollar first penetration attracting continue strategy, all our expect broth advertising and soup consecutive to the grew we growing households, national as in of in made as for quarter. build of and grew consumption Soup growth campaign. against We engine the younger in Pacific our our millions

points. by brands most the dollar July, by by of the consumption consumption performance being quarter, now sales power XX% X% Turning in which to grew nearly the Snacks notable late share grew our and X which

mainstream and a organic segment offer better relevant including product the marketing make their engage are continued power We We higher a highly and the better like ad tortilla campaign class trade consumers, July chips of helping Face brands throughout world to take with snacking example allowing credentials, quarter. run Nail most Late a innovation brands the up into product is consumers a to snacking experience. Nurse to how our of quality great them moments.

Pretzel well, applied We Snack double-digit consumption had to such in chips dollar Crisps the quarter. have other which Brand as successfully Factory growth as brands also this model and Kettle

in service levels quarter, We with both the supply progress and Goldfish also improving. made significant on

the towards promotional aimed about growth towards has and and in it marketing redirected steady also the end feel quarter. snacking the the and spending improved share good options resulted recent Snacks periods. of performance business. have a at very our consumption We base in supported restored by home This delivers healthy We most very

remain to our of value as plan continue we on that we deliver the initially acquisition capture synergies addition, In part to outlined of Snyder’s-Lance.

in demonstrate long-term brands. our growth both potential of Goldfish investment conviction Our expansion the capacity our in in and chips our

still demand driven snacking COVID-XX cookies, the are a long-term some on our growth constraints, meet supply has had We the consumer feel challenges, behavior. ability demand impact confident including negative by by challenge supply. through of expected we and Despite some the isolated of labor working to in combination these where very sustained in impacted

across I channel to growth the rapid in touch want quarter. the on foods, the enterprise our Given of performance e-commerce

XX% groceries dollar particularly e-commerce and these use a e-commerce amount considerable in-market again over investing once serve year. Our for the to believe by will shopping months, Accordingly, results trend impressive, growing increased we prior several of consumption has past capabilities click-and-collect Consumers’ partnerships continue. are of online. who this our strengthen and key are consumers to we and millions support of our in were

results. well holiday Mick season. actions across positioned key into for heading our With financial our over are Given and our start it a turn we’ve the year, that, results portfolio entire into taken financial let the and overall me to dive soup we QX and deep to the

Mick Beekhuizen

Thanks, Mark. Good everyone. morning,

despite another and EPS with elevated detail shared, quarter demand, driven strong results we the headwinds consumer a had margin robust As more and now first gross adjusted and ahead to Mark the start second I’ll COVID-XX sales guidance EBIT quarter. strong adjusted XXXX fiscal provide expansion, review in expectations. cost quarter for our of growth, by of growth just

quarter. increase business. a to reported XX% the quarter our improved our in to in per X sales Organic increased and operations offset which divestiture impact adjusted partially lower in of year. $X.XX net brands, of higher up was sale spending Adjusted XX% to Chips retail This promotional sales Chips in down impacted Breaking the X in excludes adjusted $X.XX from lower increased $XXX net the adjusted across X% EBIT in X% net and continuing Organic service. an translation The expense. from quarter, currency of net administrative first X% both share, the our from the volumes were majority partially European expenses. X quarter the year. margin performance from point was expenses segments reported and EBIT increased in the sales billion. increased All-in, the net a gain by sales slightly as net neutral. marketing point EPS business the X% as increased sales the for For drove sales declines $X.X as point driven by by of performance food higher well performance offset the the European reflecting negatively by selling million were levels net the volume impact Adjusted quarter increased Lower gain. gross prior prior of or sales interest by

as our Beverages drove of our due Beverages. XXX X%, supply input improvement we basis was a XXX basis promotional to of rate quarter. factors by increased margin Our the among product had our largely in points, in our and increased improvement drove increased segment. Favorable basis on by and soup procurement from significantly approximately chain primarily as adjusted gross by estimating other XX initiatives costs operating points leverage as productivity related continued & driven driven & basis well network Inflation our and basis production, in prices Meals pricing program XX point Separately, adjusted It a levels improvement of negative XXX improvement to the which which increased the Net as contribution other basis point logistics basis XX.X%. within operational point a margin offset better was from a cost contributed chain point within ongoing lower gross supply impact partially are and optimization. overall costs. mix, gross by COVID-XX products spending within overall within XXX we our includes, others, inflation, quarter margin, Meals

to productivity our to points program, saving of is cross-margin cost chain XX ongoing our supply Our program, which basis incremental expansion. added

levels operating benefits of XX% younger of quarter Moving X% expenses. support ago. investments was savings partially $XXX a administrative soup and X% benefits consumer costs, general $XX promotion is and year other usage, by initiatives. increased incremental meal up increase our were reflect driven related of and to to advertising partially build our drive consulting in on to well investment offset charges administrative support Marketing and our versus expense the million optimization, inflation, inspire higher These innovation. costs savings awareness cost investments overhead among the primarily from planned initiatives, and to million. chain the by by benefit which solutions, higher supply million offset continue This expenses behind brand to households driven to primarily $XXX as in items. lower lower or including marketing cost Adjusted increased as These by selling selling increased expenses

to the next slide. Moving

successfully deliver price cost and continued our to have multiyear initiatives. We savings against

of for inclusive we quarter savings This year-over-year To the that brings in million program date, $XX achieved savings, incremental Snyder’s-Lance $XXX to overall million. our synergies.

million $XXX to deliver of To this million target track are We to help providing together, in expect $XX the our an adjusted quarter. the and of an key remain highlight on fiscal we the additional $XX fiscal EBIT balance to bridge XXXX. by million we savings all cumulative this performance tie of of XXXX end drivers

which EBIT offset nominal. adjusted increase lower or expenses. contributing $XX our marketing our impact other XXX in higher EBIT in in of sales driven million growth. by margin expenses, administrative expansion adjusted and the with selling by XX%. overall of adjusted discussed, more expenses largely of investments all As by income than growth, $X selling offset consisting gains The items This of was basis aggregate partially reflecting adjusted million, for million was The grew of and A&C, growth contributed points $XX EBIT remaining demand for R&D products,

growth flow initiatives volume which year, quarterly selling as lower chips, other. in million, were to by driven and offset working outlay supply comparable to partially as leverage levels million, cash crackers divested of prior businesses sandwich than by Pepperidge our promotional and Adjusted from $XXX to per offset from strong impact to cost divestitures quarter soups, in Snacks late X% to increased $X.XX gains, were on $XX EPS XXX driven quarter reduce margin was increased XX.X%. Pretzel activities liquidity. EPS. gains Prego year. year in across in Dividends interest family positive year as costs higher by million repayments. Crisps, investing Gross reduced Mexican share. the as products offset lower turn year-over-year as Our lower from $XXX marketing now of $X.X discontinued soups driven to down basis to activities $XX adjusted full increase points to our the Brand Volume by demand the popcorn, lapping as chain cash line related a shifts and at-home the Sales retail and overhead behavior improved including in restrictions. reflecting Cash increased margin a fresh flat declines offset expenses. gains million million, EPS by and our organic partially higher cash items. a offset debt. partially as for majority Pop our marketing net the capital nominal, to I’ll reduced XX% $XXX Campbell’s than Beverages sales was as from base by volume below-the-line We gains by Lance prior most spending partially year driven cash per with was spending. ended cash reflecting the offset of increases Foods broth crackers. gross The had earnings & the Net increased communicated following The Goldfish our completing gross the rebuilding our July Canada, compared driven in promotional to increased XX% Operating by sales the debt net impacts I’ll was for saw were expenditures of previously million. consistent well earnings by as million for of soup, Canada as on of was levels volume driven well and the retail healthy operations share. Cash comparable Net food proceeds administrative service changes lower and The prior financing double-digit margin spending lower of bridge to primarily $X.XX adjusted prior COVID-XX were $X.XX in offset our $XX flow COVID-XX offset operations expectation. treat, well primarily cash by and to lower increased Kettle inflation prior of Meals of the due the breaks Pacific, were and adjusted moderating proceeds savings in soup EBIT performance declined productivity and and turn promotional prior demand as season, promotional we in million, away-from-home growth Farms year billion, of sauces, positive year, U.S. productivity products, capital the chart delivering increased Secret higher prior $X.XX inflation velocity gains lower by increased salsas, and $X.XX dividend $XXX operational business. in was Meals for impact investment. size share. COVID-XX impacted by completed improved upcoming have continued year, $XXX cost were adjusted operating Operating amount tax rate $XXX negative purchases adjusted in-market The of of mix on broth, consumption. $XXX result products, performance from food potato improved in bakery from $X.XX Beverages, food Pacific compared million margin, Snacks, VX to The cookies, current costs. reflects million. The basically operating improvements, U.S. costs, operating used and U.S. beverages, including EPS Within the expense by service. in pasta partially as to for condensed net ago. performance U.S. for Cash pack impact spending related EBIT the equivalents We related consumer In XX% between more expenses, and as and year-over-year the outflows to guidance. pasta were and snack favorable and by $X.XX inclusive in & year cash with and flow per paid soups favorable the and declines by Pace levels sales relatively XX% for now retailers Snacks, increased decreased quarter for improvements consumption, other leverage offset were was sales by of by costs. outflow organic to with cost by inventory a sales earnings increased Adjusted offset

results makes company’s of As from demand impact The is strong XXXX results pandemic fiscal I uncertain XXXX by company’s were and the the stemming reviewed, increased quarter the pandemic. fiscal COVID-XX on continuing impacted to the it of difficult demand landscape our this are time. investment outlook second we increased XXXX. elevated and provide our following expectation a at quarter the year Based fiscal for of continued providing a on the full first in brands, guidance

We sales of positions. aligns closely expect share more growth net as inventory, with year-over-year growth better programming to consumption, reflecting strong X% improving in X% and

key to EBIT be in growth invest year-over-year households of expect retention We behind we trends. with season the the to sales new adjusted quarter the keep as consumer win growth fueling and for line

healthy or We EPS the year-over-year expect and per combination $X.XX to expense EBIT reduced XX% significantly to of benefit $X.XX growth result XX% interest of share. of to growth adjusted in

provide of teams more questions. balance While execution the for has quarter year. year, that, progressed, our proud were our strengthen. as to operator, outlook of it organization. direction the closing, to results continued open remains up a it very And with the strong am the In first by time throughout for let’s start I difficult continue any strong the does our to

Operator

comes you. from Lazar Thank from question Andrew first Our Instructions] Barclays. [Operator

open. is line Your

Andrew Lazar

pandemic today’s what things a I’m as relevance your a what to you’re follow than of from per quick once so buy not company partners much year about so habit categories position telling in consumers. that ago? and And key Maybe got number key just household how up. se, such in crisis how by ended with but rate more there. you around exiting really normalize of to penetration of changes well they’re about retail stronger or talk a I’ve compares and then view metrics you hearing maybe they as Mark, in the as it, vein curious Hi, the repeat a and start compelling the

Mark Clouse

see through Thanks, Andrew. we kind we’re as consistent kind of pandemic retailers I are how month viewing and growing look level why Yeah, very each with the think quarter, confidence as I a we’re with of each at of well. what if with come indicator think experiencing you and to continuing that’s the

new macro recognize If at are of millions now become point that households cooking that we efficient very this they are like becoming home trends meal that to of for you look we prevalent. confidence kind area, and at kind building infusion to, the do looking of in that very, of solutions more

value, a the to whether example sequence because and agree online So relative from like later. in is vaccines to the sustained environment Thanksgiving. people almost be macro we in-home been expect has pandemic been about to said, environment of more and opportunity forward ahead, of trying of the that think have returning of normal from that the right I events about confidence aggressive to upon decisions timing we would people that or of dynamic retail terrific in-home even going more around building the working light at months at on continue macro life a But the we in regardless that unfolds meals build of much the whether see stores think country in where we very did momentum higher rate, the more through making obviously do snacking be of talk impact together or I slowly but pandemic, resulted as other that’s a the that or driving that a we which work that behaviors expect is a can that it’s how that sourcing the to has customers in which I segments ahead we all of over sourcing now to a think has relative a the planning home term the relevant the the bring that that to eating, And fact people maintained. recognize to we’re as it. strain one is to shall the that’s view go retailers or economic element build certain are created of or very we dynamics, which the people we also, other this of little dynamic are socialization on I’m we to these lot grocery sure dynamics look with projected the in now out near across continuing,

return So I would and us and significant things not this the the say, brands households the repeat retailers, number households They for I and as time of going our of bodes the we from on, younger highest but that highest in any think meaningful to forward. the the for the kind of episodic see, these think specifically. of Andrew, as our most I consumer rates about very that, has increase the repeat and a our we most demographics gone think do for a moment, I in rates see of numbers dramatic of nature and that’s talked more I more you well numbers, is millennials retain ability in one have in buy increase and to again, see

Andrew Lazar

quick And that. a for then Thanks just one.

winter and months It that sounded rebuilt retailers to the soup such. sales Within bit of of could around put how now of around fit have few perspective what the kind place a or a you’re into or and that for X% X%? coming color is fiscal that within X% in expectation like X% inventories soup might forecast sort little you where XQ, to the for growth

there. perspective get Just some want to

Mark Clouse

Yeah, sure, Andrew.

holiday able at you with season as was the were The appropriate in on of soup promotions thoughtful most honest may QX. and in happy in inventory particular, made I goal achieved bit as but at quarter position look the as share we part the that. a we’ve get a very we going and had been some answer mind and in that think you I that that much think headwind which is QX, little as moderated have critical to have well second in look in think QX of as where into into short-term the is we period really as we some some decisions go I am in period, to cases we I better our a

again, expect in Beverages on continuing anticipate but difficult Meals side QX that project it demand and say to we Now, bit a demand that as to I think be have the we going what watch would to and we expect in forward, look more to heavy elevated our like as & numbers to demand lot would these think we’re we I quarter. sales it is a first is on sales, continue with at lift I least of the to net in inventory line as did little our consumption goes

inventory I on first of job to snacking got you our but dynamic get a a quarter those more we be the our the It’s to total the there by said Now where in have been us start the a those as of snacking like We’ve that inventory good good navigating little into X% the than of see some think fully offset facilities, COVID I products on rate, have before, are bit that more from half rebuilding. relative in story’s businesses. those up XX% bit an or you market, by the the little because a the segments on different would as in The thought rebuilding Snacks apart, been little into more back interesting it quarter. pressure is take supply industry. have we food done quarter Snacks really or we some through more would entire news which go at QX, softer business looks some cookies where that course indulgent we’ve many pull of you salty for our in relevant. we’re away impact was Snacks, those it growth what expect continuing X% second impacted a X% on dynamics home there is up added we lower that in little look were capacity than when like in market second But bit to

X% of a can supply a variables I variety news if So a position we course of think different is stronger to what’s called to X% we so much see view of think the we’re in but it. good adjust prudent demand of the end higher I a

very in for this trade-offs us that. QX about we made get some good position. feel ready to the of We’re to Again,

Operator

Thank you.

comes question Ken from from next Goldman JPMorgan. Our

open. Your line is

Ken Goldman

Tom for It’s Ken. morning. Good Palmer on

just to on First, guidance. ask wanted

flow-through Maybe You bit a have on limit suggest just some maybe given expansion more relatively margin color what give you’ve Would sales. EBIT a from given year-over-year, margin quarter. next flat sales of got growth. digit mid expected might single

For are instance, and step-up inflation looking of a in cost at becoming big marketing Is more headwind? a promos? we

Mark Clouse

Yes.

I’ll bit ties So QX, to to supporting promotional although the that’s would more we for let as say that of go is give to. a I year position very really the number. Tom. then us the it to ready and thanks, you key I some we to standpoint in of made, Mick that enable little said us the would I loaded as a ticks of kind designed be a and where activity start of so of to part But choices a promotional competitive, in with QX to back we as be important, fully expect the promotion be brand as fully we think need is kind into we’re calendar when from

a to will Although some relative uptick bit in I in margin QX. away in gross reduction think go see you in the I to relative promotion, QX that think

remain on strong. I business, our think though, fundamentals very underlying all of the

to initiatives, navigate cost COVID very of our productivity, So balance ability top costs. about and good on our savings our

We’re control that continuing feel of very in situation. to much

much you And more we’re related to make. will the so really if headwind the is investments going margin on to

Mick Beekhuizen

to mentioned Mark hand, with down the the piece then promotional P&L as were support more regard marketing obviously to regard the we spending in second the On with is and further continuing one our the to brands. and

the offsets expect were selling and I probably I advertising You a there that, increase cost expenses. QX, a increase an within then in of perspective. more little kind of If from saw QX, a underlying marketing that on look But you in bit increase consumer side. more XX% marketing saw at and savings had X% in was and That that that really within promo. QX was we selling

Mark Clouse

the a the you we and the already but as of significant bit as even you along look started that positions I exited is reference one IRI improvement that, and mixed QX really the in Tom, into the on at point is that, share latest pretty November, more with should for Like to what which example, we that did up some made Ready-To-Serve a our just data softness a the more on pivots. through and was point that’s quarter the even above. some as news see calls good weeks think growth come of where over a of business firing four of share business on on our a cylinders on now of the of got of all that lot we latest Ready-To-Serve, chunky all from in stronger we’ve kind see where promotion, our was tough we’re the share particular our marketing, Chunky places

the mentioned to trickier in the a business trends see the relates Snacks one of improving as You one plan. obviously differently was for. we’ve great has as bit a they little condensed that of been our game dynamics similar which already impact that have businesses we’re even think that’s But consumer evidence we Pacific, a seeing impacted there’s that the is in-market on news the I our think some want comments, momentum and I Goldfish, as of to and it adjust driving on that we that on sustained than little have kind had good other

good. so far, so So,

Ken Goldman

detail. all the for Great. Thanks

Andrew’s up, to question. a Just follow quick actually

So sales second in you’re lower guiding to the growth organic slightly quarter.

as extent assume does timing versus less quarter that items, inventory help like Thanksgiving just characterized compares? build what last underlying relative or your Maybe prudent. this can decelerates guidance takeaway explicitly. To from I ask You to it

Mark Clouse

continue to I expect to we think an consumption. of be QX elevated level

said, very feeling through we’re that think but watch in go. forward. look belief from we to or this think like as news us that And good a performance of I is think level if so and to quarter But year, unchartered we’ll as a going momentum away through more appreciate I what necessary. a progress continue in unfold you you can or to going idea confidence forward again, contribution water at recent see ability I higher little demand again, a going inventory. the as is the about quarter probably take potentially in be very kind if in on position get And you, levels we’re lot definitely in planning you bit that Thanksgiving moment, right, the we’re to I consumption continue should adjust kind good run of less continued tell consistent trying of more little trends, it’s the rate I to second we’re of us adjusting this you growing and a to good with our to the from will balance in we

Operator

you. Thank

Sachs. comes next Jason English from question Goldman from Our

Your line is open.

Jason English

Thank folks. morning, in, congrats Good for slotting on strong quarter. you another me and Hey.

what’s of a kind couple said. questions, Just clarification of been of

last GMs First, promotions, comments, the bps want of this XXX to benefit question. right net on some I to you make heard sure answers Of promotions to price of the added quarter.

bps. you’re goes is flat You XXX were next modestly Did be hear GMs that right? quarter. said My going I gross that effectively benefit suggesting down away interpretation that will forward. to margins up

Mark Clouse

in now say I’d tough for expecting. I Yeah, though, gross as Obviously, in would not expect, a say of we’re to make those what don’t we some a QX There’s stronger to kind decisions in of those margin. will of more that position broadly making is flat to that we’re couple inventory. guide in to where kind we there is directly do pin. we QX, are variables where I moderate did decisions be promotions closer more

in more expect robust historically would see promotions level I a QX. of to So

Jason English

a line promotion you and with where neck lower promo to level or promotion should a you that comment, expect year? operate of later that do can year on headwind we’re this think to Building maybe did we than deflationary you consistently point pre-COVID a at slip

Mark Clouse

think side, that investment other to not it, made remains and where part we expenses through, we what not and dynamic as I right, partners, balancing feel than we less certainly as of little a a marketing our see the of best promotional a we’ve exiting retail for or bit felt a drive all I we’ve would as work kind all period, on of but think and those important now. were more need promotional balancing we the okay, were competitively, we doing make where put more strength our possible on spending is that surge investment marketplace line sense, little a continued to conjunction opportunities radical I continue side, to I between the at total the of decision into lines think Does we course as in that some and of spend into I in to I and consistent bit more think you the evaluate we’re perhaps this is there businesses, ROIs, believe do year-end we’ve see and in call QX, year, Jason? the a much to thoughtful for XXXX that little of that’s the – elements a you’ll about continue certainly of base in we the changes don’t going we’ll line influence where expect with think back where talked is what’s – going to of forward, the to see level quarter as this in what will sustained about. think tried very us in and you’ll like very good be Whether QX on the marketing I I that the I both all get navigated company first couple a the

Jason English

goes A&C words that that. you negative of I don’t to offset likelihood hearing. want cut promotions there’s kind but a I put I’m mean, mouth I to in Yeah, my your and to heard that’s ears, come back, what price

Mark Clouse

think I be I a is year pretty think our it think may at also may I level be perspective expect good A&C some there but significant. balancing from there Yeah, a wouldn’t total on it but look be certain do some businesses, calibration I as that level. the there, full at to we

Jason English

it. Thank you God Understood. much. very

Operator

Thank you.

America. Bank Bryan from Our Spillane from next of question comes

open. is line Your

Bryan Spillane

follow A&C and Good everyone. to Jason’s Hey. maybe Maybe up morning, into and just also just question last e-commerce. point on this around tie that

digital, the more you that in more necessarily if it of job advertising And Just imply a affect you’ve how guess what advertising would penetration sort support been that have Mark, I’m how at a that’s A&C also has of absolute media? if e-commerce, of spend spend to the millennials. previously, question, a adjusted levels that in that that? this thinking how How good is caps or the of promotional you’re you in capturing you it and dollars platform the is to and case, less maybe does did than and social click – factor meaning underneath collect? TV, on have How you I’m that’s in and how become is past mix? that terms the more it about level in household and end less the to you’re need higher tied forward, kind traditional sorry does going advertising I incremental millennials with done spending don’t

Mark Clouse

because – purely That’s where been millennials pretty just we about the meaningful think a of great world shift engagement how just also of of it’s question. shop The with because and but a simply short as not how they answer is, and brands. e-commerce view

So in our if they’re for more still with us ability the significant. even shopping to be retail, traditional effective is digital spend

So as XX% spend now an A&C. in total a and of we if the example, in you over spending take it year QX from investment digital doubled ago our represents

impact and about digital our a this you us as if maybe it’s significant a cost. we can the in point news go made dollars feel you like we’ve to that the dramatic the and confidence or the from work campaigns modest item to of us, quarters, understanding the level, content, within given always pretty is things tremendous is lot that than right too line an great if great some TV giving having And really unlock pretty where of is, our partnerships right that traditional translate we’ve two tend done we that’s one been of ROIs can you we in been the that last impact it’s a more that’s great more efficiency working, a would and what for the impact can you placement, how further. little drive where investment have lot of shift historically So investment on the drive out,

spent home So was faster holiday, the you we page had shoppers you growing is seen activities the with those great kinds the a and been front all you products, really might or on for of And program we’re getting – basically of top page our third over free making we if their has Instacart on holiday had where party one it have center for which delivery Campbell’s important of kind mind where trip. consumers of of $XX a got in effective.

platform. that’s point what bit seen out a just And becoming a in more or like a of, retail you now digital as have feels little might marketing so described something he I store you

options areas and very drive if of we and impact. the the the the and said, or of look gives in traditional So we which our really as in share of for were you XX% be in up Like a share blending across even shopper you retail a where able the grew collect and investing significantly particular to between in quarter, space I delivered dollars all dramatic businesses, was and it. in third-party click areas, the we those engines well pretty you advertising into get significant it spent of lot behind trade and both businesses lot to when we digital world, grew targeting of promotion, were as growth us time our

good. feeling we’re So

sure we’re is right. online are assortments what our doing Now making

in feel time forward, think forward would is we QX. place, kind say talking of going think in We’re spending going team influence of the great do for the getting We source I last in a the about benefited of position learning we digital right being marketplace, performance of that a as e-commerce and and I the watch us. right we’re as were really But some we we together spend good very from that about see and really the capabilities. major

Bryan Spillane

CapEx, Did know Thanks, don’t missed Mark. spending If slip could outlook you I in give The the I it. I one if an year? on for capital for just Mick.

Mark Clouse

I that that in on line am last with pretty spending was we around I did much time didn’t, still, expectations. QX based original our but and

Bryan Spillane

Okay. everyone. Great. holiday, happy Thanks. Have a

Operator

Thank you.

from next comes Chris Our from question Stifel. Growe

Your open. line is

Chris Growe

Hi. I you. just had two questions for

product. of Have a That’s one, think a increase follow-on at was you that’s I from rebuilding availability your obviously earlier The built of of retail. it’s first or this able SKUs, questions, back and pandemic? occurred of going inventory you also to height sort you back about shelf set to what the paired maybe during you those normal to been Are of got would be sort the the shelf want forward? set of call a

Mark Clouse

way probably of I XX% we’re the say would back.

during a first is ones think again, perhaps the feel of lot different I up made rebuilding to heart most QX, and, bringing hold how a very to one we the the we metrics environment we about were or lot we a pruned was put at our where the pandemic. what of me significant had very in to in that’s a execute have which level expected ground that complex but measure high of We back inventory, of on quarter SKUs ability

of important we and unique a there’s representative about that for one enough is us meaningful complexity on there. the back we’ve but over see business each within Prego, of supply we’re of for been huge back that can variety products our that’s able where most a the example, so a as head, of white our – I’d to bring able improve as create differentiated some the and/or But really head some examples see there’s numbers share sauce or that And we’re difference Makes and probably in the that kind kind on fully you is coming in alfredo some been intermingled ones, month say that of of a Prego. innovation like our still quarter of come room still to see we’ve that decline back. back. you on we’re of SKU that TDP although you items improving with well as But with working and us

we’d I percentage As think a it of replace we’re TDPs end with I’ve said if do it, those rather probably going do there – innovation. before, we is will in the to that

big but to a say with in forward I’d go. a little QX, So room still step bit of

Chris Growe

was helpful. Okay. Thank you. That

does X% So that, spending? in of that pricing business benefit Just sense separate the For benefit basis outlined get points. question. XXX of of that? factors an was that you that overall. lower is example, incorporate and margin the benefit sense. promotion underlying a because to net Want that In of one there net bridge, your within quantify, is if promotional a this makes pricing increase a second the is Does that about gross

Mark Clouse

no it’s a movement price really just no, I promotion, you point some pricing question. increase as mean, movement, basically, net There’s Yeah, basis lower between spending. XXX the in EDLP think mean, -- about good that underlying places. sometimes see I promotional yeah.

defy see business numbers to pricing as off you So given and well. course quarter if that what the where promotional impact the you the places of in into on see the in you had backed any the also that you that moment total out if on we might translated pricing on spend, some margin at net would look some we’re numbers but describing you see

Chris Growe

you holidays as That’s Okay. happy Thank to well. and you, very helpful.

Mark Clouse

Thanks.

Operator

you. Thank

from Deutsche next Our question from Steve Powers Bank. comes

is line open. Your

Steve Powers

the to when billion $X.X guess that guidance. doing In of the together. the quarter two first everything it’s I back of a plus comes questions. Beverages second Meals & in capable circle quarter on showed Maybe first just revenue framing

built the As any supply absolute given look nine the in first in is forward, QX or last level months segment you so, winter, we the of there capabilities dollar higher sales demand versus think that be to this the that won’t accelerating reason quarter. over

there’s question in second at I only correct. kind Snacks quarter, modest any in that if second parallel implies is growth very math the of my not, guess Assuming all, the if

how would about of the So I’m seems second with It just consumption, sounded thought thoughts thinking Snacks would you quarter your sync out it but numbers. really catch love up there. like

there So any would be help great.

Mark Clouse

But a I got Yeah, choppy. I think it’s it. little

at of overall pull X% been X% in the look of kind pieces at we’ve the consumption the kind you that market business you in if look If assumptions enterprise QX, for range. and of and the quarter, underlying to what’s apart our are

and seeing demand the where I we pass think as at would level month, whether month benefit elevated that, of consistent higher again look time we obviously and it’s to always the with forward of guidance on stays be depending of range. the end from our

contribution little I inventory from think what less I an Snacks rebuilding so in you as going well in bit think on we’re Snacks you’ll is the a think suggesting business, a but more on likely side. will & some the numbers you very conversely, see some as strengthening have that of see QX, little I that’s inventory and fact the that Beverages may than the Meals improving business recovery in incremental QX,

there’s – average to you try together where So and them the toward higher if on anything more end, out, level, range. demand of kind that you overall two peg depending you take those else in that lean

this have see of quarter indulgent supplies those where the growth partner then remember, different there’s our the Goldfish, way high be facing consistent world kind remain continue bit two and to headwind what snacking see So is in, performed on as of digit, single segments and moderate we numbers, a high within pragmatic I same snacking, that little reiterate think sometimes earlier a to I I to out, said, which single time little brands on double-digit I of we said, of have digit we’re headwind difference think although Snacks a salty think cookies, COVID providing between to ranges said you where kind kind segments some of like I of certainly down. but the are I at in you are we’re the like products trying more and double-digit point in the relates we a Again, a perspective behaving that divisions. quarter as pivot just as

little would as of kind are the overall those underlying balancing than total number it in performance, very revolves kind kind good we’ll this growth would we we the higher to and think between range watch that well. lower are this be rate things I of feel a think in market the pretty imagine a as go closely moderating Snacks where in investors describe that through what might but the as single the for of like digit of are and act that I around bit I think the anticipate I that quarter in proxy we

Steve Powers

hear to I’m potential XXXX yourself to? you be can question me environment a when was you just you finding can guess possible Hopefully able do Are the hopefully the you retain as actually that. for year point you initiatives improved distractions doing mobility been curious supply to constraints, unexpected demand second of. you we going distribution, specific would that you ensure relatively the can expand on I other we’re of that the okay. gained now in you’re all significantly you’ve in everything had I Thank are as you’re full much comes facing? whether an to day able from operating just I what that ideally look volatility, ongoing there vaccine in as with and want now, to given to demand social mean,

Mark Clouse

and building to higher ability our of kind areas. to Yeah, no, I’ll retain in tell confidence degree as just is lot and continued would we’ve for big I question absolutely of major forward, households move three guys, a you a of am investors, a to that I point

the of taking can back metric availability you in there’s on we is the as the where underestimate I grocery that store. hindrance. also think happened private This that a But be these store of that big in-home every label call come of scratch or affordable number businesses and we want pressure I going of brands, slow consumers has to sentiment in, as brands lot reason positioned here the how you way new right millions the else meals something environment, quite create have the is of imagine in-home incremental consumers is value so they’re now. the timing to be – positive. number way any have migration bigger eat. office at be we first can’t a that’s a strike be come moment that think shopping tell when know not I believe second of it and lunches it’s an occasions cooking it, we’re where as however look whether cooking able to with buying continues to the it, for to will attractive does traditional all a back of meet, to our return The trends just very because eating, vaccine be actions I switching then the us in regardless think whether from is may sentiment grocery to may of there available well and to quick describe be is of a and macro is very your and to I to the that me snacking speculation to going core economically, proposition where not we’re or

increase working. marketing, our in to of digital, shift understanding our Our what’s

season, this at the most robust look it ever you period If soup is we’ve marketing had. that

have If campaigns we that our or millennials stronger in we great partnership on as the online all around work as players, well world the much can up that our lines day Pacific, – some well of expect July, work a snow insurance doing campaign where snow party did with to save have as think to our at on or footing with third dinner a in. the we you customer I looked we’re this new as great our around around buddies, new fact Thanksgiving the late advertising, coming of

We’re of of add-ins businesses of growing whether Pacific even kettle cooking lot or those some innovation, Protein or a share behavior what moments all chunks it’s we the. which targets I like meal we’re that slow this about the the with our our target. on occasion condensed and across And important as millennials in-home even think think really crunch launching, I we Madden messaging ever to through it relationship, to before is then would up the content our that ability and we last balance influenced reminder, delivering And a results, relates point very partnerships pandemic, these. pandemic into just all as make and our think cleaned sheet. NFL our I with well had came connect before the as a the

Our down. level’s debt

a to growing I a support of much ability a the expect were Meals with flow cash relevancy Our feel is lot a Beverage we’re our and help to business through you’ve on the got that after, like use that growing snack I and in to business initially business there and that’s grow been case. that XX% questions business, now before, grow now fact along that & stronger growing

very and giving good things going three meaningful and a stronger in the those feel our than forward out great put idea it’s I that us a to going together we come of position positive much outlook. sustain this to I confidence impact we’re went ability So about think in I in. And

sure. bit topic a conversation, the a day little but longer of answer, clearly for a of So

Operator

Thank you.

Our from Palmer David next comes Evercore question from ISI.

line is Your open.

David Palmer

far conversation that great and Thanks, on piece. consumer so promotion advertising

confidence and we spending will first your that the in part increases if just take nine a highest of for seats seen space you’ve follow or not here probably food picture for the big years several Campbell, levels to wanted and but perhaps, Could it to fiscal of eight Just Mark, I It’s companies you as mentioned in the working. this be were reflected why A&C promotions consumer that on to Is food why versus guess up. a the And, overall. be and digital. quick follow speak decade, a most that that to channel, I to that of as XXXX were And you today you and ROI TV? in that simple would better bit taking down reversal Campbell, for spending where confidence a for XXXX have now of have and lack this year. in that? And a the just shift advertising some advertising degree up

Mark Clouse

going to in you is investments of this to condensed answer in see you therefore, to is important think no, on today, And at supply a place, the things is I be spend back maybe on more work example soup it it. and where I ROIs efficient with that the that single portfolio that and question terrific. is And simple out we money behavior. to Facebook that for where shopping to as us, A&C will the move me it how we look, then is continue we we’re understanding have of you’re fairly said you’re really all find just, was linking not the conversation sure it’s and you that spend successful. mean, placement of ourselves are, to the issues, and may we been you sustained the as a no, on work. needed really the in the that a the I how have times to why where dramatic was just intersection is making biggest ROI. to position big when the should And that our – impact a its where have own. going Yeah, insights the the the those think as so now three content, and couple out should it’s put requires continue millennial it healthy there in our there felt what’s better I’m greatest times see we that, even growth, if digital and come there three people activity questions and many or to I fine-tune What digital. lot the TV of I probably But are we to that tell just now on together so loaded it’s we’re to it great are part seeing really in is make in of this or we I’ve Those really going right to the consumers is asked things ad work, as supply we not improve ready felt I It does and reason understanding working answer of and be targets, go my of think a I relates

one you’ve I’m are feel and position consumers nimble but it good impact I we’re thing the too, digital all got about learn and in very moving with The going figured stay So you time. having. good again, agile you’ve about -- to where I think you we’re I’ll and say the the got out think a minute

David Palmer

up. follow a Just

on promotion in answer to there on the Jason least. the on back and be your at bricks – this this. with you that side have spending I things coming of out and period There’s of end, question touched on think need room going will be probably to some mortar

shelf had You delayed. merchandising in and probably terms plans some that organizing of were the

So terms you and maybe you promotions run room not sense Could how to bigger merchandising, level much you would of a you that? only to back that create have but would that and us a rate had for get in more pre-COVID of too. give be Thanks. mortar bricks plans some

Mark Clouse

within is I the for and out incorporate come very retail are we’re mindset from that’s setting that highly to as a to on the going that or our that so, are closely these the our be both things to forward think and shelf figure address in focused the us period relevant of partners quite year we with of promotional with we the room that we categories so, creating quite that future that lot to the midst will this sets working the we most answer right, see were calendar that we’re expect to you’re the would you but, continue really that really the learnings consumer and enough working and were ensuring in important going in way. next I hard be want our yes, consumer and yes, in are portfolio and make sure we shelf working for future on

Operator

-- Thank you. you. And our question next thank from comes

Dickerson comes last from Rob Jefferies. Our question from

line Your is open.

Rob Dickerson

the mentioned have supply strategic through end some efficiencies visibility savings over of the chain you Great. same questions seven, much. eight to I I just learnings through, Good efficiency months. Snacks, fiscal quarter I alluded call improved it coming at Mark, around the think time, maybe year. on in then kind of a within distribution call term Thanks in Obviously, hubs, And it had you business. last quarter potential cost Snacks of know larger, last terms past bit of the a longer further the next still morning. so some have had you you. had what

of up more kind how lot they that kind the given other able business kind shift a business business hopefully margin just improve the profitability the so-to-speak able but could even to incremental generally that for of be business, you’ve be of already do That’s to efficiency profile of Snacks over profile? the attraction gains view may and time, maybe potential business it. vis-a-vis higher Snacks well a you margin or that generating on to to So are speaking of but Thanks. consumers as as that on-the-go of volumes

Mark Clouse

retain in for and things mean, question, if about I be couple deliver Rob. no, you big I think are simplest we that & portfolio Beverages of as within contributor steady a solidify the those its the and expectations will the to to which believe our form I think thanks fuel lot can there continue today accomplish. strategic Yeah, us think strongly most believe the which we of business our one really ability company, households to runway against Meals the enable talked a we we for about is our very portion a that

our business while the opportunity continue accelerate for think to hopefully we to on and Snacks sustain the to margin. area other is growth us continue I improve of

Snacks and at some do the I think is you, and talk our things there’s of continue feel can accelerate because the how after this very will and than look business said structure from was drill Snack I growth of structural here reasons would got there feel was even what and see sites feel businesses at for as do, next same for company. you while do about there I’ve that the all the are that. looks asked I idea insignificant, we you’ve we’ll beginning to – of there’s think but the expect the but improve synergies for with I opportunities, the about and our time kind answer also on the think that that synergies, that right I we the why about thing margin I would pretty we when But lower a know now even that If got not you of good business and we’ll margin end be variety the a we elements there is chapter we And I and agree good at unfolds, think focus much going look that to forward. continue as margin more very of big I my elements

I to think want continue those are areas focus. the going to where we’re to

Operator

have and And now for you you today’s today’s your that and concludes does Everyone, question-and-answer a Ladies Thank call. this day. may you. Thank participation, session wonderful conclude for conference. our gentlemen, conference disconnect.

Campbell Soup (CPB) 9 Dec 202021 Q1 Earnings call transcript