Campbell's quarterly sales lukewarm
Firm fails to strike the right marketing recipe amid growing competition and evolving tastes
Camden, New Jersey: Campbell Soup Co. is still struggling to heat up its lukewarm soup sales, with net income slipping by 5 per cent in its fiscal third quarter even as the company spent more on marketing.
The Camden, New Jersey-based company known for its red and white soup cans is pushing to regain lost ground amid growing competition and evolving consumer tastes. To attract busy, younger consumers, for example, Campbell plans to roll out a variety of soup pouches in flavours like Moroccan chicken and coconut curry early next fiscal year.
At the same time, however, the company has had to raise prices to offset higher costs for ingredients, and volumes are continuing to slip in key categories.
Despite an improvement in overall sales trends, CEO Denise Morrison said in a conference call that she was "not happy" with the US soup sales in the latest quarter.
"We have just hit the point of stabilisation — I haven't declared victory yet," Morrison said. She said the company clearly failed to strike the right balance in pricing, promotions and advertising.
For the year, Campbell said it still expects its adjusted earnings per share to slip between 5 per cent and 7 per cent from last year, which would indicate a profit of $2.35 to $2.42.
For the three months ended April 29, Campbell said it earned $177 million, or 55 cents per share. That compares with a net income of $187 million, or 57 cents per share, in the same quarter last year.
Excluding one-time items such as restructuring costs, the company earned 56 cents per share. By that measure, analysts polled by FactSet expected 52 cents per share on average.
Total revenue for the quarter rose to $1.821 billion (Dh6.69 billion), from $1.813 billion. Gross profit margin fell to 38.8 per cent, from 40.4 per cent, as a result of higher commodity and promotional costs.
Sales of US soups fell 3 per cent from a year ago, as a result of declines in Campbell's condensed soups, ready-to-serve soups and broths. Sales of its Prego pasta sauce rose 3 per cent, as increased advertising for new flavours drove up volumes.
