Campbell Soup (CPB) fell 11 percent as of writing in the morning of May 18, 2018. The triggers for the plunge were the disappointing Q3 results announced before the market opened as well as the surprise announcement of the 'retirement' of the CEO which was effective immediately. It was only in early April when I wrote about why its acquisition of Synder's-Lance was a negative and that "it no longer made sense to stick around for a quick turnaround". The share price has declined 19.6 percent thereafter. Since the beginning of 2017, Campbell Soup has lost over 40 percent of its value.

Campbell Soup Q3 2018 EPS of $0.70 surpassed consensus estimates by $0.09 but its revenue of $2.13 billion (+15.1% Y/Y) missed by $10 million. The continued weakness in condensed soups sales was a major dampener. Its wet soup market share dropped 2 points from a year ago to 59.5% for the 52-week period. The greater concern, however, was the further compression in its adjusted gross margin rate by 390 bps to 32 percent. The company attributed the margin squeeze primarily to cost inflation and higher supply chain costs as well as the dilutive impact of recent acquisitions (Snyder's-Lance and Pacific Foods) and higher promotional spending. Cost inflation rose 4.5% thanks to higher prices on dairy, meat, steel cans, and aluminum, as well as the escalation of transportation and logistics costs. Recall that steel and aluminum prices skyrocketed following the anticipation of import tariffs.

READ FULL ARTICLE HERE