What's going on?
Campbell Soup was just right on Wednesday: the American company reported a better-than-expected quarterly profit and its stock price heated up 9%.
What does this mean?
Last year, Campbell Soup announced a restructuring plan to change the 150-year-old company’s recipe. Growth in its core soup business had become tepid as consumers shunned processed meals. Campbell’s instead turned to snacks, having brought the heat by buying Snyder’s-Lance – maker of Kettle Chips – for $5 billion.
With a new head chef in Campbell’s busy kitchen, its plan appears to be working: quarterly revenue from its snacks and biscuits business was 37% higher than the same time last year. And Campbell’s profit for the quarter was $84 million – a hearty increase from last year’s tinny loss of $393 million.
Why should I care?
For markets: Investors got their fill.
Investors seemed to like the taste of Campbell’s results and slurped up its shares. The company also raised its annual profit forecast – partly thanks to cost cutting, having already slashed over $600 million of expenses since last August. And, as investors appeared to ease off last week’s trade war inspired stock selling, they also snapped up shares of Silicon Valley software darling Salesforce – which, late on Tuesday, reported better-than-expected quarterly results of its own.
The bigger picture: There’s always room for snacks.
As consumers become more health conscious, companies giving them what they want are killing it (figuratively of course 😉). Beyond Meat’s stock, for example, has risen nearly 300% since going public last month. But it seems there’s still healthy demand for snacks like those sold by Campbell’s and PepsiCo – purveyor of Doritos and Cheetos. People might want their soup fresh, but they want to have their chips and eat them too – being healthy doesn’t have to be all or nothing.