Campbell Soup Co. (NYSE:CPB) announced Thursday that it is selling its international operations and fresh-food unit as the 149-year old condensed soup maker struggles to regain its financial footing.
The move dashed expectations of a sale of the entire company, prompting a nearly 3% drop in premarket trading. Shares shed 2.53% in the regular session to US$38.96.
Despite pressure from activist investor Dan Loeb to find a buyer amid a three-year sales slump, the company will pursue a turnaround plan to bolster soup and snack growth in its key markets.
As part of a sweeping review, the Campbell Soup board considered a "full slate of strategic options,” including divesting businesses, splitting the company, and pursuing a sale, Campbell's interim CEO Keith McLoughlin said statement.
Finally, the board concluded that the "best path forward" is to "focus the company on two core businesses in the North American market," said McLoughlin.
Meanwhile, Campbell reported a better-than-expected quarterly profit, but sales fell short of expectations. It reported fourth-quarter July 2018 earnings of US$0.25 per share on revenue of US$2.22bn. The consensus earnings estimate was US$0.24 per share on revenue of US$2.24bn. Revenue grew 33.4% on a year-over-year basis.
The company said that with its planned divestitures, it expects fiscal 2019 earnings of US$2.40 to US$2.50 per share on revenue of US$7.925bn to US$8.05bn. The current consensus earnings estimate is US$2.75 per share on revenue of US$10.28 billion for the year ending July 31, 2019.
“Fiscal 2018 was a challenging year for Campbell,” McLoughlin said in an earnings release.
“These results and our outlook for fiscal 2019 reinforce the need for the significant actions we announced this morning as part of our comprehensive, Board-led strategy and portfolio review. We believe these actions will put us on a path to create sustainable shareholder value.”
Contact Uttara Choudhury at [email protected]