Campbell Soup Co. (NYSE: CPB) released its most recent quarterly earnings results before the markets opened on Tuesday. The firm posted $0.92 in earnings per share (EPS) and $2.16 billion in revenue, versus consensus estimates from Thomson Reuters that called for $0.97 in EPS and $2.17 billion in revenue. The fiscal first-quarter from last year had $1.00 in EPS and $2.2 billion in revenue.

During this quarter, overall sales decreased 2%, driven by a 2% decline in organic sales, reflecting lower volume. Specifically, this was largely due to the performance of Campbell’s Americas Simple Meals and Beverages division, where U.S. soup sales declined by 9%. Consumer takeaway decreased 2% in U.S. soup while significantly lower retailer inventory accounted for the remaining decline.

Gross margin decreased to 36.2% from 38.6%. Excluding items impacting comparability in the current year, adjusted gross margin decreased 2.1 percentage points to 36.5%. As strange as it seems, the rising cost of carrots was a large factor in this margin shift.

In terms of guidance for the 2018 fiscal year, the company expects to see net sales down 2% to flat and EPS to be in the range of $2.95 to $3.02. There are consensus estimates calling for $3.05 in EPS and $7.88 billion in revenue.

On the books, cash and cash equivalents totaled $163 million at the end of the quarter, compared with $290 million in the same period last year.

Denise Morrison, President and CEO, commented:

This was a difficult quarter, particularly for our U.S. soup business. The operating environment remains volatile with a rapidly evolving retailer landscape and competitive activity pressuring the top line. Our bottom line performance was negatively impacted by a lower adjusted gross margin rate due in part to cost inflation, higher carrot costs and escalating transportation and logistics costs following the hurricane season.

Shares of Campbell Soup were last seen down about 7% at $46.56, with a consensus analyst price target of $49.71 and a 52-week range of $45.00 to $64.23.

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