Campbell Soup Co.'s soup revenue cooled in the fourth-quarter, but stronger sales of Goldfish crackers, Milano Melts cookies and other items helped the food maker deliver adjusted results that beat Wall Street expectations.
The company, based in Camden, N.J., is trying to regain ground it lost after several years of declining soup sales as shoppers curbed their soup consumption, stopped stocking their pantries or shifted to competitor's brands. Campbell is in the early stages of a turnaround plan that includes adding high-end soups and broadening its' offerings in its snack, beverage and other categories.
"2012 will be a year of transition," said Denise Morrison, who took over as CEO on Aug. 1.
Like many food companies, Campbell has had to adjust to the desires of today's consumer, who eats at home more often but is still very selective about what they spend their limited grocery budgets on. Campbell's soup remains popular with baby boomers and seniors, but the company has struggled to reach a broader audience and is trying to a new strategic direction to boost its top and bottom lines.
Campbell said in July that it would cut 770 jobs worldwide and close its operations in Russia and a plant in Marshall, Mich. as it tries to lower overhead costs. The company also is building a new $30 million "innovation center" for its Pepperidge Farm brand, where it will create new bakery and snack products. Additionally, Campbell said it will look to international markets for future growth.
The company reported Friday that its fiscal fourth-quarter profit slipped 12 percent, weighed down by restructuring charges. But the food maker's adjusted results beat expectations, and its full-year guidance is expected to meet or beat analysts' estimates.
Campbell earned $100 million, or 31 cents per share, for the period that ended July 31. That compared with net income of $113 million, or 33 cents per share, in the same quarter last year. Excluding the special charges, Campbell earned 43 cents per share. Revenue rose 6 percent to $1.61 billion, helped by higher prices and growth in its international and baking and snacking segments.
That beats the 38 cents per share earnings on revenue of $1.58 billion that analysts polled by FactSet had anticipated.
Campbell's revenue from its soups and sauces business fell 8 percent. That includes a 9 percent decline in soup sales but soup profits improved as it raised prices and limited promotional spending. The company's revenue from beverages business, which includes products such as "V8", fell 1 percent, on tougher competition.
However, revenue for the global baking and snacking segment increased 17 percent, helped by higher sales of Pepperidge Farm products, cookies, crackers and frozen products. Its international business reported a 12 percent increase in revenue, with sales up in Europe, Canada and the Asia Pacific region. And its revenue from North American foodservice business, which provides products to restaurants, cafeterias and other food service providers, climbed 10.
Campbell's full year net income fell 5 percent to $805 million, or $2.42 per share, compared with $844 million, or $2.42 per share, in the prior year. Annual revenue edged up 1 percent to $7.72 billion from $7.68 billion.
Campbell still expects fiscal 2012 revenue to be flat to up 2 percent, which translates to revenue of $7.72 billion to about $7.87 billion. Adjusted earnings are predicted to fall 5 percent to 7 percent, which means 2012 earnings of about $2.37 to $2.41 per share.
Analysts predict full-year earnings of $2.37 per share on revenue of $7.83 billion.
Shares of Campbell fell 40 cents to $31.46 amid a broad market pullback on Friday.