• by Karlene Lukovitz  @KLmarketdaily, June 11, 2009

Del Monte Foods' year-old strategy -- which includes substantially increased marketing investment on key brands -- continues to yield analyst-pleasing results.

The company reported fiscal fourth-quarter net sales growth of 20.7%, to $1.1 million, and a 75% gain in diluted EPS, to $0.35.

For the full fiscal, Del Monte saw net sales grow 14.1%, and diluted EPS gain 27.6%, to reach $0.74.

Whereas previous quarters saw volume declines, this quarter's sales growth was driven by volume gains in both the consumer products and pet products businesses, as well as by price increases.

Consumer products net sales gained 20% to reach $568.8 million. Volume growth was particularly strong for vegetables and tomatoes and new products. Pet products' net sales gained 21.6% to reach $401.7 million, with volume gains in dry pet food and new products within the Meow Mix and Kibbles 'n Bits brand lines.

For the full year, consumer products net sales grew 11.7% to $1.95 billion, and pet products net sales gained 16.9% to reach $1.67 billion.

In conjunction with pricing increases to recover margin erosion seen in recent years and operational efficiency programs, Del Monte upped its fiscal '09 marketing expenditures by about 30% over the prior year or double its fiscal '07 spending.

During a results conference call with analysts, chairman/CEO Rick Wolford confirmed that Del Monte will continue its accelerated marketing investment in fiscal 2010, and continue to focus spending primarily on core brands within snacks, packaged produce and dry pet food.

Wolford reported that the company continues to work with specific retail customers to meet their center-store promotional requirements, but does not anticipate any significant increase in trade spending during 2010.

The company is projecting net sales growth of 4% to 6% in 2010 to reach sales of $3.63 billion, and EPS from operations to fall between $0.76 and $0.80.