Campbell Soup on Wednesday fell short of market expectations for quarterly revenue, a sign that demand for its sauces and broths is slowing due to the surge caused by the pandemic.

With the COVID-19 pandemic closing restaurants around the world, packaged food makers have taken advantage of customers stocking frozen entrees, snacks, sauces and soups at home.

However, consumers are now returning to restaurants and old ways of ordering food, which has hit demand for Campbell’s products in recent months.

The company’s organic sales fell 2% in the quarter as it also grappled with industry-wide supply chain gaps and labor shortages .

“Our second quarter was challenging as we faced a tough comparison and overcame labor and supply constraints, made even more difficult by the surge of Omicron,” said the chief executive. of Campbell, Mark Clouse.

Net sales fell to $2.21 billion in the second quarter ended Jan. 30 from $2.28 billion a year earlier. Analysts on average had expected $2.24 billion, according to Refinitiv IBES. Net income attributable to the company fell to $212 million, or 70 cents per share, from $245 million, or 80 cents per share, a year earlier.

However, Camden, N.J.-based Campbell kept full-year earnings targets well above expectations, and shares rose 4% to $43.98 on the news.

Campbell, which includes Pepperidge Farm biscuits among its brands, said the benefits of recent price changes will be reflected in the current quarter with improved earnings ahead despite higher inflation.
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Clouse predicted that gross margins, which fell to 30.3% from 34.4% the previous year, would recover for the rest of the year thanks to improved staffing, including 3,500 new workers over the course of of the past seven months.

“We are now seeing absenteeism and vacancy rates return to normal levels. This translates into increased production and the beginning of a return to normal distribution and inventory levels,” he said.

Campbell – known for Swanson broth, Goldfish crackers and Pepperidge Farm biscuits – said the benefits of recent price changes will be reflected in the current quarter with improved earnings ahead despite higher-than-expected inflation.