Shares of food and beverage company Campbell Soup (NYSE:CPB) fell as much as 12.4% on Friday, following the company's fiscal third-quarter results. At 11:29 a.m. EDT, shares are down about 11%.
Investors are likely bearish toward the stock on Friday primarily because of management's reduced outlook for full-year profitability and the announcement that Campbell Soup CEO Denise Morrison is stepping down. Morrison's decision to step down comes amid a challenging environment in which Campbell's annual sales have fallen for three fiscal years in a row.
For its fiscal third quarter, Campbell reported a 15% year-over-year increase in sales. But this double-digit increase includes sales from Campbell's recent acquisition of Snyder's-Lance. Organic sales were in line with sales in the year-ago period.
With a gross margin of 29.1%, down from 35.9% in the year-ago quarter, Campbell management said the key metric was below its expectations.
"Based on our third-quarter results and outlook for the balance of the year, we are lowering our fiscal 2018 earnings guidance," said Campbell CFO Anthony DiSilvestro.
Campbell's results were negatively impacted by "both execution-related and external challenges," DiSilvestro said.
For fiscal year 2018, management was previously forecasting adjusted full-year fiscal 2018 earnings per share to decline about 3%. Now management expects adjusted EPS to decline between 6% and 5%.
Aiming to reverse the downward trajectory of its business, DiSilvestro said the company is "addressing these challenges with renewed urgency."
Looking ahead, we will be reviewing all aspects of our strategic plans and portfolio composition. We anticipate that our review, which will take several months to complete, will lead to changes designed to improve our operating performance and create long-term shareholder value. We plan to discuss the outcome of this review when we report fourth-quarter and full-year results in late August.
Effective immediately, Morrison has been replaced as CEO by board member Keith McLoughlin, who will serve as interim CEO as the company attempts to improve execution and return to growth.