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Food Data Is Troubling; Companies Explain Why

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Food Data Is Troubling; Companies Explain Why

U.S. Nielsen Data for packaged foods revealed a 5.5 percent decline in February sales, representing the second consecutive month of lackluster volumes. The results follow a 1.9 percent decline reported last quarter. Bernstein’s Alexia Howard mentioned the top expectations among packaged food companies.

Key Takeaways

While saying that companies did not have firm answers for why sales were down, Howard mentioned key takeaways:

  1. The delay in processing of tax returns by some people had resulted in lower purchases of bulk items. “[W]e doubt this is the reason as people on certain supplemental income payments won’t be buying branded foods anyway,” the analyst pointed out.
  2. Advertising was less effective, with people spending more time watching CNN and Fox, rather than the food network or other typical sites.
  3. Concerns surrounding the political climate had resulted in people being more cautious in their purchases. Howard commented that this would be “a positive for food at home” with people spending less on eating out, so “we're having a hard time buying that too.”
  4. A year-over-year decline in promotional spending “which could lead retailers to fill in the gaps by promoting their own private label products (although again, this seems unlikely with retailers asking for more promotional spending),” the analyst added.

Ratings And Price Targets

  • Kraft Heinz Co (NASDAQ: KHC) — Rated: Outperform, PT at $110
  • Conagra Brands Inc (NYSE: CAG) — Rated: Market Perform, PT at $36
  • Hershey Co (NYSE: HSY) — Rated: Market Perform, PT at $110
  • Campbell Soup Company (NYSE: CPB) — Rated: Market Perform, PT at $61

Related Link: Craving Packaged Food Stocks For 2017? RBC Serves Up 4 Buy-Rated Names

Related Link: Do Avian Flu Scares Impact Chicken Stocks?

Latest Ratings for KHC

DateFirmActionFromTo
Mar 2021Credit SuisseMaintainsUnderperform
Feb 2021JP MorganDowngradesOverweightNeutral
Feb 2021Morgan StanleyMaintainsEqual-Weight

View More Analyst Ratings for KHC
View the Latest Analyst Ratings

 

Related Articles (CPB + KHC)

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