Campbell’s Slides 9% on 36% Dividend Cut, General Mills Falls 4%, Kraft Heinz Drops 3%

Campbell's cut its dividend 36% and guided fiscal earnings well below consensus, dragging CPB down 9% and GIS down 4%.

XLP held flat while SPY gained 1%, confirming the selloff targets center-store packaged food specifically, not the broader market or staples sector.

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Packaged-food names are selling sharply Thursday even as the broader staples complex holds firm and the wider tape climbs. The Consumer Staples Select Sector SPDR ETF ( NYSEARCA:XLP ) is flat at $85.57, while the S&P 500 tracking SPDR S&P 500 ETF Trust ( NYSEARCA:SPY ) is up 1% to $772.73. The selling is inside center-store food, evidently.

The Campbell's Company ( NYSE:CPB ) stock is down 9% to $21.53 at midday after the company cut its dividend and guided the coming fiscal year below Wall Street's bar. Meanwhile, General Mills ( NYSE:GIS ) stock is falling 4% to $38.88 in sympathy with that guidance reset. Kraft Heinz ( NASDAQ:KHC ) stock is sliding 3% to $25.43 as the read-across extends to peers with similar U.S. center-store exposure.

Campbell's board approved a quarterly dividend of $0.25 per share, down 36% from $0.39, payable November 2 to shareholders of record as of October 1, which takes the annualized payout to $1.00 per share from $1.56. Management framed the reset as a way to accelerate debt reduction, and CEO Mick Beekhuizen didn't soften the message. "Our performance is not where it needs to be, and we are taking decisive action to improve it," he stated.

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For the coming fiscal year, Campbell's guided net sales to decline 2% to 4% and adjusted earnings per share to a range of $1.65 to $1.80. That sits below analyst consensus, which had called for a Campbell's net sales decline of 0.8% and adjusted EPS of $1.86. In other words, the outlook is a contributing factor to the CPB share-price decline.