Kraft Heinz shares fell 4% on Wednesday after the company revealed its sales dropped in the most recent quarter as stiff prices crushed 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 dropped 2.8% to $6.38 billion, below Wall Street’s forecast of $6.42 billion.
Kraft Heinz blamed the “unfavorable” sales on persistent “economic uncertainty” as consumers scrimp and save.
The company said it raised its prices by 1.2 percentage points during the quarter ended Sep. 28. During the same period, organic sales, which exclude the impact of currency, acquisitions and divestitures, plunged 3.4 percentage points.
Inflation has cooled sharply, rising 2.4% in September versus a mid-2022 peak of more than 9%, according to the Labor Department. But consumer sentiment remains far below pre-pandemic levels, according to the University of Michigan’s Surveys of Consumers.
“When we look at our U.S. Retail business, we are expecting more of an elongated recovery, driven by specific categories that continue to experience pressure,” Kraft Heinz CEO Carlos Abrams-Rivera said in a statement. “While a recovery is taking longer than originally anticipated, we are not losing sight of our long-term strategy.”
Kraft Heinz has focused on boosting sales in its Away from Home division, which covers stadiums, hotels, hospitals, schools and other opportunities outside of the grocery store.
The company revised its full-year financial guidance toward the lower end as consumers grow more cautious and cut back on non-necessities.
Kraft Heinz forecast annual organic net sales will fall at the low end of its earlier range between flat growth and a 2% drop.
The company said adjusted earnings per share will drop toward the lower end of its prior range between $3.01 to $3.07.
The company reported adjusted earnings per share of 75 cents, 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