By Deborah Mary Sophia
(Reuters) -Campbell Soup Co raised its annual sales forecast after topping Wall Street estimates for quarterly results on Wednesday, as inflation-weary Americans turn to its condensed soups, ready-to-serve meals and snacks to stock their pantries.
The company's shares rose about 2% in early trading after it also lifted the lower end of its earnings outlook, as higher prices and supply chain improvements offset persistent cost inflation.
Though stretched thin amid increasing prices, Americans are still snacking on Campbell's cookies and salty snacks while a continued preference for cooking at home has further bolstered demand.
"Consumers continue to seek out our brands as they look for ways to stretch their food budgets and turn to value-driven meals that ... are easy to prepare," Chief Executive Mark Clouse said.
For instance, Campbell's mac and cheese dish featuring its condensed cheddar cheese soup and its one-pan beef roast and vegetables recipe using its French onion soup - both of which cost under $4 a serving - resonated well with customers.
While U.S. soup sales rose 7% in the second quarter, Campbell is facing growing competition from cheaper private-label counterparts for soups and broth.
"Any time we're losing share in the category, I'm not happy about that," Clouse said, but added the company was taking steps to regain the share.
Strong demand for Campbell's snack brands like Goldfish crackers and Pepperidge Farm cookies drove a 15% jump in the snacks division's organic sales, helping it lift quarterly net sales 12% to $2.49 billion, above a Refinitiv estimate of $2.44 billion.
While the results lived up to expectations, there was likely "still some conservatism being built into the full year", Barclays (LON:BARC) analyst Andrew Lazar said.
New Jersey-based Campbell expects fiscal 2023 net sales to rise between 8.5% and 10%, up from its previous forecast of 7% to 9%.
It also projected annual adjusted earnings of $2.95 to $3.00 per share, compared with a prior target of $2.90 to $3.00.