Campbell Soup's net income slipped 8 percent in the first quarter, as the world's biggest soup maker booked charges related to closing its oldest U.S. plant and a push into the faster-growing premium juice market.
The company, which also makes Pepperidge Farm baked goods and V8 vegetable juices, on Tuesday cited the moves to reposition its business for the decline in its quarterly profit. But it noted that its flagship U.S. soup business saw a promising sales bump, helped by a new lineup of soups and sauces intended to resonate with younger consumers.
Campbell Soup Co., based in Camden, N.J., has struggled in recent years amid declining consumption of canned soup and intensifying competition. CEO Denise Morrison, who was hired about a year ago, has been working to revitalize the company's main business with new flavors and packaging designed to resonate with people in their 20s and 30s. Instead of the company's iconic steel cans, for example, the newest soups come in plastic pouches that can be torn open and microwaved.
The company said these "Campbell's Go" soups, as well its new "Skillet Sauces," helped lift sales for its U.S. soup and sauce business by 3 percent in the quarter.
The increase for the unit was driven by a 1 percent increase in volume and 2 percent increase in price. Sales of condensed soups fell 1 percent, however. And this past September, the company cited declining consumption for the closure of a spice plant and one of its four U.S. soup plants. The closures, which will take place by next summer, will result in the loss of more than 700 jobs. Campbell said it will incur total pre-tax costs of $115 million, most of which will be in its fiscal 2013.
Even as it works to revitalize its soup business, Campbell is looking for growth in new areas. The company's acquisition of Bolthouse Farms this summer was intended to give it a stake in premium juice and fresh packaged foods, which are growing more quickly than the general packaged foods market.
For the period ended Oct. 28, the company said it earned $245 million, or 78 cents per share, for the quarter that ended Oct. 28. That compares with $265 million, or 82 cents per share, a year ago. Not including such one-time items related to its acquisition of Bolthouse Farms and the plant closings, Campbell said it earned 88 cents per share.
Net sales rose 8 percent to $2.34 billion.
Analysts on average expected a profit of 85 cents per share on sales of $2.36 billion, according to FactSet.
Sales for Campbell's snacks and baked goods unit rose 1 percent to $574 million, driven by its Goldfish crackers and new Jingos crackers. Sales for the beverage unit fell 5 percent to $189 million, due to a decrease in sales of V8 vegetable and V8 V-Fusion juices.
The company stood by its guidance for 2013, with earnings expected to be between $2.51 per share and $2.57 per share. Sales are expected to grow 10 percent to 12 percent, primarily driven by its acquisition of Bolthouse Farms.
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