Kraft Heinz shares fell 4% on Wednesday after the company disclosed that its sales declined in the most recent quarter as tighter prices dampened demand for its supermarket staples.
The packaged food giant — which owns Kraft Mac & Cheese, Heinz Tomato Ketchup, Kool Aid and Jell-O — said third-quarter net sales fell 2.8% to $6.38 billion, short of Wall Street’s estimate of $6.42 billion. is lower than forecast.
Kraft Heinz blamed continued “economic uncertainty” for “unfavorable” sales as consumers skimp and save.
The company said it raised its prices by 1.2 percentage points during the quarter ended Sept. 28. During the same period, organic sales, which exclude the effects of currency, acquisitions and divestitures, fell 3.4 percentage points.
Inflation has come down rapidly, growing 2.4% in September A peak of more than 9% in mid-2022, according to the Labor Department. but consumer sentiment is well below pre-pandemic levelsAccording to a University of Michigan survey of consumers.
“We are expecting a more prolonged recovery as we look at our U.S. retail business, which continues to experience pressure by specific categories,” Kraft Heinz CEO Carlos Abrams-Rivera said in a statement. “Although the recovery is taking longer than originally anticipated, we are not losing sight of our long-term strategy.”
Kraft Heinz has focused on increasing sales in its Away from Home division, which includes stadiums, hotels, hospitals, schools and other occasions outside grocery stores.
The company revised its full-year financial guidance downward as consumers have become more cautious and are cutting back on non-essentials.
Kraft Heinz estimates annual organic net sales will fall to the bottom of its previous range between flat growth and a 2% decline.
The company said adjusted earnings per share will fall to the low end of its prior range of $3.01 to $3.07.
The company reported adjusted earnings of 75 cents per share, above LSEG analysts’ expectations of 74 cents.
Kraft Heinz said its adjusted gross profit margin rose 30 basis points to 34.3% in the third quarter.
with post wires
