Inflation-battered consumers are cutting back on those pricier bags of pretzels and chips.

Campbell Soup (CPB) surprised a few on Wall Street this week when it reported volumes at its snacks division — which ranges from Snyder's Lance pretzels to Cape Cod chips to Goldfish crackers — fell 1% in the most recent quarter.

Volumes dropped 2% in the preceding quarter.

"I think what you did see in this quarter was a little bit of the normalization of that growth line [for snacks] and some building or mounting pressure as it relates to the economy in general," Campbell Soup CEO Mark Clouse told Yahoo Finance (video above).

Clouse believes there is nothing "structurally" wrong with the company's snacks business, which has seen demand stabilize post-Memorial Day.

But he acknowledges a sticky inflationary environment is causing consumers to be more cautious at supermarket aisles, though he stopped short of calling snacks a new "luxury."

"If you are a middle- or lower-income household right now, you're still dealing with high interest rates, higher rent, you probably just took a hit on car insurance," Clouse added.

Campbell isn't alone in feeling pressure on snacks, once seen as immune from consumer spending cutbacks.

PepsiCo (PEP) saw volumes at its Frito-Lay North America business decline 2% in the first quarter. Slim Jim owner Conagra Brands (CAG) notched a 0.8% volume decline in the quarter.

"Snacking categories, particularly salty snacks, have seen sluggish scanner [sales tracker] data as it was one of the last categories to feel [consumer] elasticities," explained BofA packaged food analyst Bryan Spillane in a client note.

"As we move closer into the summer (bigger snacking season) and promotional/merchandizing activity potentially unlocking incremental demand, snacking volumes could see some relief."

The earnings recap

• Net Sales: +6% year over year to $2.4 billion

  • Meals & Beverage Sales/Operating Profits: Unchanged/+26%

  • Snacks Sales/Operating Profits: -1%/-7%

• Gross Margin: 31.2% vs. 30.9% a year ago

• Adjusted EPS: +10% year over year to $0.75

What else caught our attention

• Between the lines: Campbell came in below consensus on both gross profit and gross margin.

• Heat turned down on the outlook:

  • Organic sales projected down 1% to flat (previous: low end of up 2% to down 1%)

  • Adjusted EPS projected at $3.07 to $3.10 (previous: $3.09 to $3.15)

Wall Street weighs in

• "The better than expected EPS guidance incorporating Sovos and better than feared organic sales revision should support a modest outperformance for the shares in our view." — Stifel, Matthew Smith (Hold rating, $45 price target)

• "Base business challenges keep us on the sidelines." — Jefferies, Rob Dickerson (Hold rating, $44 price target)

Inside of a mixed economic backdrop, CEOs are preparing for a contentious presidential election season that could weigh on what consumers buy, from soup to new cars. Ford (FORD) CEO Jim Farley weighs in on election risk in the latest episode of the "Opening Bid" podcast. Listen in below.

Brian Sozzi is Yahoo Finance's Executive Editor. He is also the host of the "Opening Bid" podcast. Follow Sozzi on Twitter/X @BrianSozzi and on LinkedIn. Tips on deals, mergers, activist situations, or anything else? Email [email protected]. Are you a CEO and want to come on Yahoo Finance Live? Email Brian Sozzi.

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