Campbell Soup Co raised its annual sales and profit forecasts after quarterly revenue topped estimates on Wednesday, signalling steady demand for its soups and sauces even as the company raised prices to offset rising costs.
Packaged food manufacturers in North America have seen relatively little pushback from consumers despite multiple rounds of price increases this year, as high inflation drives people to cook at home rather then spend on eating out.
"Through a combination of inflation-driven pricing actions and productivity improvements, we have substantially mitigated significant inflationary pressure in the quarter," Mark Clouse, chief executive officer, Campbell Soup said.
Campbell's upbeat results follow those from Kellogg, General Mills and Kraft Heinz who have in recent months said that several rounds of price increases have not yet dented demand for their products significantly.
Still, even though groceries and essentials are among the last to see a drop in demand during economic downturns, analysts warn that companies such as Campbell could soon start to suffer as lower-income and elderly shoppers switch to cheaper store-brand products.
The Prego pasta sauces owner expects fiscal year 2023 net sales to rise 7% to 9%, compared with its previous forecast of a 4% to 6% increase.
It also expects fiscal year 2023 adjusted earnings per share between $2.90 and $3.00, compared with its prior expectations of $2.85 to $2.95.
The company's net sales rose 15% to $2.58 billion in the first quarter compared to analysts' expectations of $2.45 billion, according to IBES data from Refinitiv.
Shares of the Camden, New Jersey-based soup-maker rose 2% in premarket trading.