At Campbell Soup, How About Them Crackers?
Campbell’s (CPB) chief Denise Morrison is trying hard to execute a turnaround, not so easy at a company that has pushed out one too many cans of watery soup. Morrison is spiffing up the place by putting out a line of soups for hipsters -- and in case that’s not cool enough, it’s releasing Andy Warhol-inspired cans. Campbell's also paid $1.55 billion for Bolthouse Farms, financed with debt, to get further into the premium juice business.
But the promised turnaround has yet to appear. The company reported fiscal year-end earnings this week, and U.S. soup sales were down 2% for the year, hurt by a 7% decrease in ready-to-serve soups. Morrison said that “all of us at Campbell’s agree that the pace of our progress needs to accelerate.” Granted, profits were up.
But revenue growth is anemic.
Investors were mildly miffed.
But they’ve been sticking around for this.
Morrison blamed the global economy and said Americans are making fewer trips to the grocery store and buying less while there. The company also said that – despite the new products being rolled out -- it will lower its advertising spend on U.S. soups, which will hurt sales.
That seems odd, especially because its baking and snacking segment rose 1%, thanks to Goldfish crackers. And as Morrison said on the call with analysts: “Increased marketing investments drove double-digit growth in Goldfish crackers.”
Maybe Campbell thinks its new products will sell themselves. Or maybe the folks there think growth will be driven by Campbell’s bored and patient investors, who can sit around and snack on Goldfish while waiting for the turnaround.
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