The Campbell Soup Company saw its profit fall 5.4% on declining soup volumes and higher costs in the third quarter, although sales in its US beverages and snacking segments were up.
The company has struggled to revive lagging soup sales in recent years, and is in the midst of an innovation push. It introduced 35 new soup varieties in the fall, backed by an advertising drive – and the company intends to introduce still more soup varieties in the coming year, in both ready-to-eat and condensed formats.
In a conference call with investors, Campbell’s president and CEO Denise Morrison said she was “not happy” with the company’s US soup performance during the quarter.
“We have just hit the point of stabilization,” she said. “I wouldn’t declare a victory yet but we are largely where we expected to be year-to-date despite the third quarter. “
She said that the company needs to achieve the right balance of advertising, promotion, product quality, value for money, and positioning to increase US soup sales.
The company reported net profit for the third fiscal quarter ended April 29 of $177m, or $0.55 per share, compared with $187m, or $0.57 per share, in the prior year. Total sales were up slightly to $1.82bn, from $1.81bn in the third quarter last year.
US Soup sales fell 3% year-on-year, with condensed soup sales down 5%. Ready to serve soups fell 1%, and broth sales were down 4%. The company intends to raise soup prices 5% next month in an effort to make up for lower volumes.
Meanwhile, US beverage sales were up about 5%, driven by double-digit gains for V8 Splash beverages and gains in V8 V-Fusion beverages, and new products such as V8 V-Fusion Smoothies, V8 V-Fusion Sparkling Flavors and energy drinks. And Campbell’s baking and snacking segment saw sales increase 3%, driven by its Pepperidge Farm brand.
Morrison said: “Although overall sales trends are improving, we are not satisfied with our performance this quarter. As planned, we focused our marketing efforts on increasing advertising and consumer promotion. We executed well in some businesses, delivering solid sales growth in U.S. Beverages, Pepperidge Farm and Canada. We did not execute as well in others.”