Double-digit sales growth in the first quarter for Del Monte Foods Company (NYSE:DLM) was impressive. Of course, most food producers, from Heinz (NYSE:HNZ) to General Mills (NYSE:GIS), are growing sales at a gangbusters pace with demonstrated pricing power. However, with costs rising rapidly and margins slimming down, scrolling down the income statement may tell a different story than what lies at the top.

Unfortunately for Del Monte, the top-line performance didn't trickle down to earnings. Pricing increases and volume growth couldn't keep up with a raging increase in commodity prices and cost of goods sold increased by a whopping 23.8%. Operating expenses and market expenses related to Pet Products further strained margins and the end result was a $10.1 million loss, versus last year's $3.5 million profit.

Del Monte's balance sheet doesn't paint a strong picture. Cash has dropped to $8.6 million (66% less than the end of last year's stash of cash) while long-term debt remains above $1.8 billion. The company is still in flux as it grows through acquisitions including Meow Mix and Kraft's (NYSE:KFT) Milk-Bone products. Combine these acquisitions with a competitive marketplace and investors have got to wonder whether Del Monte is in over its head. Perhaps that's why the company is selling off the StarKist assets it owns from the StarKist brand it purchased from Heinz several years ago.

Mid-range foodies such as Del Monte and Smithfield Foods (NYSE:SFD) and Hormel Foods (NYSE:HRL), who also recently reported commodity-triggered earnings declines, are being hit the hardest right now in the food production industry. While Heinz and others have been able to overcome commodity increases through international revenue boosts, companies with a primary focus on domestic business have definitely been hit the hardest.

Long term, Del Monte just doesn't look to have its act together. The company opened its shiny new Pittsburgh Del Monte Center in 2006. Two years later, the company decided to move more than 100 marketing jobs from this new Pittsburgh center to its San Francisco headquarters. As a potential investor, I have to wonder whether "centralizing" operations is worth the move to higher-cost California, especially with the large amount of debt that Del Monte is carrying. Del Monte should step back and really think about what its strategic goals are, especially in light of an inflationary economic environment.

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Fool contributor Colleen Paulson holds no positions in any of the stocks mentioned in this article. The Fool's disclosure policy has always been a healthy eater.