Campbell net falls on higher promo spending
November 23, 2010
CAMDEN, N.J. — Increased promotional spending that did not yield expected sales increases contributed to an 8% decline in earnings for the Campbell Soup Co. during the first quarter.
For the quarter ended Oct. 31, the company had earnings of $279 million, equal to 82c per share on the common stock, which compared with $304 million, or 87c per share, during the same quarter of the previous year. Sales for the quarter were $2,172 million, down 1% from $2,203 million during the first quarter of fiscal 2010.
“In a challenging consumer spending environment, we delivered mixed results in our U.S. soup business this quarter,” said Douglas R. Conant, president and chief executive officer. “Condensed cooking soups performed well, with sales up 7%, as our marketing efforts continued to resonate with consumers seeking convenient simple meals for their families. The key negative factor impacting our first-quarter results in U.S. soup was the performance of our ready-to-serve and condensed eating soups, where increased promotional spending did not produce the planned volume gains. This was due in part to even steeper promotions by competitors, which we chose not to match.
“We intend to remain competitive in U.S. soup through the height of the soup season, and it’s likely that margin pressures will persist through the second quarter. In the second half, we plan to place greater focus on advertising and brand-building initiatives in our marketing efforts, as we adjust our promotional activity to achieve improved price realization.”
In the U.S. Soup, Sauces and Beverages segment, the company had operating earnings of $295 million, down 11% from $331 million during the same quarter of the previous year. Sales in the segment were $1,103 million, down 3% from the previous year.
In the Baking and Snacking segment the company posted operating earnings of $100 million, comparable to the same quarter of the previous year, and sales were $544 million, up 3% from the previous year.