HJ HEINZ posted weaker than expected quarterly sales and said US consumers remained frugal, sending the ketchup maker's shares lower.
Yet the company topped analysts' profit expectations, helped by growth in emerging markets, and raised the target for how much free cash it expects to generate this fiscal year.
"The US consumer is in a funk," said Heinz chief executive William Johnson on a conference call. "While we see glimmers of hope, the reality is they are making conscious and significant trade-offs in their budget.
"And for the first time ever, maybe since the Great Depression, we're seeing 27 per cent of them without discretionary income . . . which is an incredibly high number," he added, citing data from consumer tracking firm Nielsen.
Heinz said it expects sales from food service customers, such as restaurants, to improve in its second half, begun on October 28th, and to be about flat on a year earlier, as some consumers come out of hibernation.
But barring a turnaround in sales of frozen foods, Heinz expects US sales volume to be "flattish" in the second half, reflecting lower promotions spending, which Heinz said had not adequately enticed shoppers. - (Reuters)
