Campbell Soup Co. (NYSE: CPB) reported adjusted third-quarter fiscal 2014 results before markets opened on Monday. The food producer reported adjusted earnings per share (EPS) of $0.62 on $1.97 billion in sales. In the same period a year ago, the food producer reported EPS of $0.58 on revenue of $1.96 billion. The results also compare to the Thomson Reuters consensus estimates for EPS of $0.59 and $2 billion in revenue.

For the 2014 fiscal year, Campbell now expects sales from continuing operations to show growth of 3%, compared with an earlier estimate of 4% to 5%. Adjusted EPS growth is now expected to come in at the low end of previous guidance of $2.53 to $2.58. The consensus estimate for full year EPS is $2.53 on revenue of $8.53 billion. The company’s full-year 2013 revenue came in at $8.58 billion.

The adjusted gross margin slipped from a year-ago total of 37% to 35.2%, which the company attributed to higher promotional spending, increased supply chain costs, cost inflation and the impact of acquisitions. Higher selling prices and productivity improvements helped offset some of the drags on gross margin.

The company’s largest division, U.S. Simple Meals, reported that volume and product mix increased sales by 4% to $672 million, and the higher prices and sales allowances contributed another 2% to the overall increase of 7%. Sales of canned condensed soup were down 3% and sales of ready-to-serve soup were down 1%, while broth sales rose 14%. The company’s Prego and Pace brands also posted significant sales gains.

The company’s president and CEO said:

While we delivered growth in third-quarter earnings, our organic sales growth of 1 percent reflected mixed performance and fell short of our expectations. … Despite an increase in the frequency of our promotional activity in the third quarter, we did not realize the anticipated lifts in a challenging consumer environment. Sales of U.S. Soup held steady versus the strong performance in the year-ago quarter. … While we are not satisfied with our sales performance, we remain confident that we are pursuing the right strategy to reshape Campbell and deliver sustainable, profitable net sales growth as we continue to strengthen our core business and expand into faster-growing spaces.

While Campbell does mention higher costs, those do not appear to be the primary cause for what is certainly a disappointing third-quarter performance. Rising commodity prices could make the tough quarter ahead even tougher for Campbell.

Shares were down about 4.7% in premarket trading, at $43.00 in a 52-week range of $38.30 to $48.83. Thomson Reuters had a consensus analyst price target of $41.50 before the results were announced.

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