Tags: Campbell | Soup | shares | outlook

Campbell Soup Shares Fall as Outlook Disappoints

Monday, 19 May 2014 07:47 AM

The condensed soup aisle is a lonely place these days.

Campbell Soup Co. cut its annual forecast Monday, saying U.S. shoppers aren’t buying enough soup — especially the condensed varieties that have long been a staple of American pantries. The company now expects sales to grow about 3 percent, compared with a previous range of as much as 5 percent. The news sent the stock down 2.3 percent.

Campbell, based in Camden, New Jersey, is struggling to rekindle Americans’ appetite for soup despite a push to promote the products last quarter. While the company’s cooking broth and sauces posted sales gains in the period, Campbell’s condensed soup decreased 3 percent. Ready-to-serve soups, which don’t require adding water, dropped 1 percent.

“I am disappointed that our plans did not drive stronger sales results in U.S. soup,” Denise Morrison, Campbell’s chief executive officer, said in the statement. “Despite an increase in the frequency of our promotional activity in the third quarter, we did not realize the anticipated lifts in a challenging consumer environment."

The shares fell to $44.06 at the close in New York, marking the biggest one-day drop since Feb. 3. The stock has risen 1.8 percent this year.

Year-Earlier Gain

Campbell’s U.S. soup division had a 14 percent sales gain in the year-earlier quarter, making it tough to maintain growth. Still, the latest performance fell short of the company’s expectations, Morrison said.

Campbell also said that earnings will be at the low end of its previously announced range of $2.53 to $2.58 a share, excluding some items. Analysts were already predicting $2.53 on average, according to data compiled by Bloomberg. The company has been working to cut costs by closing two plants and eliminating about 700 full-time jobs.

The problem may be that Campbell’s latest soup offerings aren’t winning over consumers, Erin Lash, an analyst at Morningstar Inc., said in a report. Increased promotions can’t solve that, she said.

“We’ve been saying for quite some time that promotions are not a sustainable strategy to drive long-term profitable top-line growth,” Lash said. “While Campbell has been working to turn around its U.S. soup and beverage businesses, this quarter’s results showcase the firm has yet to gain much traction.”

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Campbell Soup Co. cut its annual forecast Monday, saying U.S. shoppers aren't buying enough soup - especially the condensed varieties that have long been a staple of American pantries.
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2014-47-19
Monday, 19 May 2014 07:47 AM
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