Campbell earnings down 8% in quarter

by Staff
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CAMDEN, N.J. — With sales down and significant efforts in advertising not producing the desired results, earnings for Campbell Soup. Co. fell 8% during the second quarter.

For the quarter ended Jan. 30, the company posted income of $239 million, equal to 72c per share on the common stock, which compared with income of $259 million, or 74c per share, during the same quarter of the previous year. Sales for the quarter were $2,127 million, down 1% from $2,153 million during the same quarter of the previous year.

“The overall competitive environment remains challenging throughout the food industry, particularly in the U.S.,” said Douglas R. Conant, president and chief executive officer. “In U.S. Soup, as planned in the second quarter, we maintained strong levels of advertising and promotional support to defend our consumer base. As a result of this support, externally measured consumer takeaway volume at retail in U.S. Soup grew during the quarter. However, our high levels of promotional spending in the quarter did not deliver planned sales lifts and negatively impacted margins. As we stated at the end of the first quarter, in the second half we will more heavily leverage advertising and brand building initiatives while reducing our reliance on trade promotions. We expect that improved price realization will lead to better profitability and strengthen our financial position in anticipation of higher cost inflation going forward.

“Baking and Snacking — our second largest segment — delivered top- and bottom-line growth in the quarter. This performance reflected our consistent innovation, compelling advertising and effective promotional activities.”

For the six months ended Jan. 30, the company had earnings of $518 million, or $1.53 per share, down 8% from $563 million, or $1.61 per share, during the same period of the previous year. Sales for the six months were $4,299 million, down 1% from the same period of the previous year.

Campbell said it anticipates continued competitive pressure in U.S. Soup, Sauces and Beverages during fiscal 2011, and as a result growth will be at more modest rates than previously announced. The company now anticipates net sales to be between a decline of 1% and growth of 1% and for earnings per share to decline between 1% and 3%.

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