Campbell Soup CEO out, steel tariffs to bite soon
NEW YORK (AP) - The top executive at Campbell Soup will retire and the company is undergoing a strategic review as it tries to revive sales that have been under pressure due to shifting American tastes and rising costs.
Denise Morrison, who has been has been CEO since 2011, is being replaced immediately by Keith McLoughlin, who will lead the company on an interim basis.
The company, founded almost 150 years ago, is also facing new headwinds due to recent changes in U.S. trade policy.
In March, the Trump administration slapped tariffs on imported steel and aluminum.
Anthony DiSilvestro, the chief financial officer at Campbell, said a lot of the company's rising costs will be "driven by the impact of anticipated tariffs."
"We expect double-digit increases on steel and aluminum," said DiSilvestro, adding that the company anticipates inflation to drive prices for wheat and vegetables and other goods as well.
Shares plunged more than 10 percent in early trading Friday. Shares of other consumer-focused company that rely on metals fell as well, including PepsiCo Inc., Coca-Cola Co. and Molson Coors Brewing.
Commerce Secretary Wilbur Ross famously held up a can of Campbell's soup in a CNBC interview this year to make the case that the Trump administration's steel and aluminum tariffs were "no big deal."
The claim was immediately contested by a number of U.S. industries.
The Can Manufacturers Institute, which represents 22,000 workers at manufacturers nationwide, believes the tariffs will harm their industry and consumers alike. The institute says there are 119 billion cans made in the U.S., meaning a 1 cent tariff would lead to a $1.1 billion tax on consumers and businesses.
McLoughlin, who is taking over as CEO, is the former chief executive at appliance maker Electrolux. He has been a board member at Campbell Soup Co. since 2016.
The New Jersey food company is wrestling with declining soup and juice sales in a market crowded with competitors at the same time that many families are seeking foods they consider healthier and less processed.
The company posted a third-quarter loss of $393 million on Friday and lowered its earnings projections for the year, due in part to the acquisition of the snack company Snyder's-Lance Inc.
Campbell's now expects 2018 earnings to decline between 5 percent and 6 percent, greater than the previous projections of a decline ranging between 1 percent and 3 percent.
Industry analysts scrambled to break down what happened during the quarter, focusing on falling gross margins, higher costs.
There are just a lot of unanswered questions at this juncture," wrote David Driscoll of Citi Research.
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AP reporters Ken Thomas and Paul Wiseman in Washington contributed to this report.