Campbell Soup reported results for its second quarter fiscal 2023 ended January 29, 2023.
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Net sales in the quarter increased 12% versus the prior year to $2.5 billion.
Organic net sales increased 13% as favorable inflation-driven net price realization was partially offset by volume / mix declines.
Gross profit increased to $759 million from $669 million in the prior year. As a percent of sales, gross profit margin was 30.5% compared to 30.3% in the prior year.
Excluding items impacting comparability, adjusted gross profit increased to $763 million from $671 million.
Excluding items impacting comparability, adjusted gross profit margin increased 30 basis points to 30.7% as favorable net price realization and supply chain productivity improvements were partially offset by continued cost inflation and higher other supply chain costs as well as unfavorable volume / mix.
Marketing and selling expenses increased 10% to $217 million and represented approximately 9% of net sales. The increase was driven by higher advertising and consumer promotion expense which increased 17% versus moderated levels in the prior year, and higher selling expenses, partially offset by increased benefits from cost savings initiatives.
Administrative expenses increased 10% to $162 million. Excluding items impacting comparability, adjusted administrative expenses increased by $13 million, or 9%, to $157 million due to higher general administrative costs and inflation, higher benefit-related costs and higher incentive compensation, partially offset by lower expenses related to the settlement of certain legal claims.
Other expenses / (income) were $0 million compared to other income of $19 million in the prior year. Excluding items impacting comparability, adjusted other expenses were $6 million compared to adjusted other income of $9 million in the prior year primarily due to lower pension and postretirement benefit income this year.
As reported EBIT increased to $350 million from $323 million in the prior year. Excluding items impacting comparability, adjusted EBIT increased 14% compared to the prior year to $362 million primarily due to higher adjusted gross profit, partially offset by higher marketing and selling expenses, higher adjusted other expenses and higher adjusted administrative expenses.
Net interest expense was $45 million compared to $46 million in the prior year. The tax rate was 23.9% compared to 23.5% in the prior year. Excluding items impacting comparability, the adjusted tax rate increased 50 basis points to 24.0% compared to 23.5% in the prior year primarily due to the impact of state tax law changes in the prior year.
As reported EPS increased to $0.77 per share compared to $0.70 per share in the prior year. Excluding items impacting comparability, adjusted EPS increased $0.11, or 16%, to $0.80 per share compared to $0.69 per share in the prior year, primarily reflecting the increase in adjusted EBIT, partially offset by a higher adjusted effective tax rate. ■