Campbell Soup Co. (CPB) is a staple of the food products industry because of its sheer ubiquity on supermarket shelves in the United States and abroad. The New Jersey company sells so much food in addition to its iconic red-and-white cans of soup that the Campbell Soup lineup of products reads like a grocery shopping list: V8 vegetable juice, Swanson broth, Prego pasta sauce, and Pepperidge Farm baked products, among other well-entrenched brands.
The company consistently has raised its annual dividend payout, boosting it to $1.075 in fiscal 2010 from $1 the prior year. But Campbell's stock price essentially has moved sideways for the last five years. In early June, most analysts following Campbell had neutral ratings on the company's stock, urging investors to neither accumulate it nor sell it. Investment firm Credit Suisse raised its rating of Campbell shares May 24 to neutral from underperform.
Campbell's sales boiled over in 2008, totaling $7.99 billion then cooled off in subsequent fiscal years, falling to $7.58 billion in 2009 before rebounding to $7.67 billion. Department store chain Wal-Mart was Campbell's biggest customer in fiscal 2010 and 2009, accounting for 18 percent of total revenue in both years.
Net income followed the same path as sales in the last three fiscal years, hitting $1.16 billion in 2008 then plunging to $736 million in 2009 before turning up to $844 million in 2010. The company forecast in May that its earnings per share in the 2011 fiscal year would fall by 1 percent to 2 percent from adjusted earnings per share of $2.47 in fiscal 2010.
Campbell earned $705 million, or $2.11 per share, in the nine months ended May 23, compared with $731 million, or $2.09 per share, in the prior comparable period. Sales in the nine months increased 1 percent, year over year, to $6.11 billion.
New leadership may put Campbell on a more profitable path. The company has promoted Denise M. Morrison from chief operating officer to chief executive officer, succeeding Douglas R. Conant, who began his tenure as president and CEO in 2001. Morrison was scheduled to become the new CEO on July 31, 2011.
"I'm encouraged by our progress," Morrison said on Campbell's May conference call with stock analysts to discuss third-quarter financial results. "But I want to be perfectly clear: I'm not satisfied. We remain focused on creating long-term shareholder value by stabilizing sales and then driving profitable net sales growth. We still have more to do."
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