Campbell Sees U.S. Sales Gains In Fiscal Q4

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Campbell Soup Company saw a 9% gain in its U.S. soup business sales and a 7% gain in sales of U.S. simple meals in Q4 of its fiscal year, ended July 29.

The soup gains broke an eight-quarter streak of sales declines. 

Q4 U.S. soup sales growth was due primarily to condensed soups, which rose 14%, including double-digit gains in eating varieties. Campbell attributed the gains to higher retailer inventory levels associated with the timing of promotional activity, as well as consumption increases.

Cooking varieties also saw U.S. gains, and sales of ready-to-serve soups rose 1%. Sales of Chunky soups increased slightly, and Slow Kettle soups (launched in July 2011) contributed to growth, but Select Harvest sales declined.

Q4 U.S. simple meals sales reflected volume/mix gains of 4% and price/sales allowances gains of 3%, according to Campbell. 

Q4 U.S. broth sales rose 4%, primarily due to volume-driven gains in aseptically packaged broths and “Swanson Flavor Boost” concentrated broth (launched in July 2011), partly offset by declines in canned broth.

Q4 U.S. sauces sales increased 4%. Sales of both Prego pasta sauces and Pace Mexican sauces were driven by volume gains, benefiting from increased advertising and promotional support, Campbell reported.

Global baking and snacking sales decreased by 1%, although organic sales grew by 2%. International simple meals/beverages sales decreased by 7% due to unfavorable exchange rates, and North American foodservices sales dropped 3%.

Marketing and selling expenses increased 5% during the quarter (to $206 million, versus  $196 million in Q4 2011), due primarily to a 6% increase in advertising and consumer promotion expenses, higher spending to support innovation efforts and higher selling expenses, partly offset by a decline due to currency.

Campbell President/CEO Denise Morrison said that organic sales growth across most of the company’s portfolio in Q4, including the gains in U.S. soup and simple meals, reflected retailers’ positive response to new product development, adding that shipping of new products for fiscal 2013 launches has begun. 

Campbell plans to launch 50 new soup and simple meals products in fiscal 2013.

Full Year: U.S. Still Down

However, for the full fiscal year, U.S. soup sales declined by 2%, and U.S. simple meals sales declined by 1%. 

U.S. soup performance reflected a 7% decline in ready-to-serve soups, partially offset by a 1% increase in condensed soups and a 3% gain in broth sales. Simple meals’ performance was affected by a 4% impact from volume/mix and a 3% impact from price/sales allowances. 

Sales for U.S. sauces grew slightly, as gains in Prego pasta sauces were mostly offset by lower sales of Pace Mexican sauces and declines for other simple meal products.

Global baking and snacking sales grew 2%, while international simple meals/beverages declined by 4%.

Corporate Overview

Net earnings for Q4 were $127 million, or $0.40 per share, compared with $100 million, or $0.31 per share, in the prior year. Q4 net earnings included transaction costs associated with the August 2012 acquisition of Bolthouse Farms. The prior-year quarter’s reported net earnings included charges associated with the company’s restructuring program, announced in June 2011. 

Excluding items impacting comparability, Q4 adjusted net earnings decreased 8%, to $130 million, versus $141 million in the Q4 fiscal 2011.  Adjusted net earnings per share decreased 5%, to $0.41, versus $0.43 in fiscal Q4 2011.

For the full fiscal year, net earnings were $774 million, or $2.41 per share, compared with $805 million, or $2.42 per share, in fiscal 2011. Excluding items impacting comparability, adjusted net earnings declined 7%, to $783 million, versus adjusted fiscal 2011 net earnings of $846 million. Adjusted net earnings per share declined 4%, to $2.44, versus an adjusted $2.54 per share in the prior year.

Sales for the year were $7.71 billion, comparable to the prior year. 

Marketing and selling expenses increased $13 million to $1.02 billion, primarily due to a 3% increase in advertising and consumer promotion expenses.

Morrison said that, during fiscal 2012 -- the first year of Campbell’s strategic transition plan -- the company had advanced its strategies to stabilize and profitably grow North American soup and simple meals, expand the company’s international presence, and drive growth in healthy beverages and baked snacks through renewed focus on consumer insights, brand-building efforts, the innovation pipeline and expansion into the fast-growth fresh market via its Bolthouse Farms acquisition. She added that Campbell is now focusing on sharper execution.

2013 Guidance Boosted

Campbell is now projecting fiscal 2013 sales growth of 10-12%, adjusted EBIT of 4-6%, and adjusted EPS of 3-5% (to between $2.52 and $2.57). WallSt.com reports an analyst consensus of estimated fiscal 2013 EPS of $2.52 on revenue of $8.49 billion.

Morrison cautioned that price increases in the months ahead could hurt soup volume.

She also said that, while retailers’ response has been positive, consumers’ response to Campbell’s new soups and sauces will be clearer after the company’s fiscal first quarter. 

Tags: earnings, food, sales
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1 comment about "Campbell Sees U.S. Sales Gains In Fiscal Q4 ".
  1. PJ Lehrer from NYU , September 6, 2012 at 9:51 a.m.
    More good news for Campbell's may be on the way. Most of my Gen Y/X students think that their new "GoSoup" line could be a big hit. You can checkout what they have to say here. http://pjlehrer.blogspot.com/2012/07/will-gen-y-buy-coconut-curry-chicken.html