Campbell Soup Company has reported a 5% drop in net earnings in the first quarter as soup demand continues to fall in the United States, although the company is beginning to see the first fruits of a turnaround program.
Campbell reported a 1% drop in sales during the quarter ended October 30, to $2.16bn, and net profit fell to $265m, from $279m a year earlier. However, profit was better than expected, with per share earnings of $0.82 – compared to the average $0.79 per share expected by analysts polled by Thomson Reuters.
The company has been trying to make up for several years of declining soup sales, and is in the midst of an innovation push, launching 35 new products this fall with bolder flavors and new ingredient combinations, such as its new Slow Kettle Style Soups.
Denise Morrison, who was appointed president and CEO of the company in June, said: “As we’ve previously stated, fiscal 2012 will be a year of investment as we establish the foundation for the next era of profitable growth at Campbell.
"While it is early in this transition year, our efforts to stabilize US Soup profitability are on track.”
She said that the company had raised prices in response to inflation and reduced marketing and promotional spending – moves that saw the company’s marketing and selling expenses fall 6% during the quarter to $261m.
“We also commenced our US Soup advertising later in the quarter to coincide with the start of soup season,” Morrison added. “This is part of a planned, full-year timing shift of our media dollars into the soup season where they are most effective."
The company reiterated its guidance for the full 2012 fiscal year, saying it expects sales to grow 0%-2%.
As well as attempting to improve soup sales, the company has also focused on growing its baked snacks business, which includes its Pepperidge Farms and Goldfish brands, and sales in global baking and snacking were up 6% in the quarter.