Campbell says sales, profit dip; cuts guidance

The Campbell Soup Co.'s fiscal second-quarter income fell 8 percent as soup revenue slipped, the company said Friday.

The quarterly decline was expected, but it came with some other bad news from the food maker. The outlook for the rest of the year is cloudy enough that Campbell lowered its guidance for the second time in about three months.

Campbell says it now expects full-year revenue to be essentially flat — between a 1 percent decline and 1 percent growth, and earnings per share to fall by 1 to 3 percent.

Previously, the company said it expected earnings for the year to be up by 2 to 4 percent, or between $2.52 and $2.57 for the full year. The revised guidance is for a profit between $2.40 and $2.45 per share.

The second-quarter result matched Wall Street expectations — and for exactly the reasons analysts were expecting.

Campbell president and chief executive Doug Conant said the company used heavy promotions to sell a higher volume of soup in the U.S. But the volume was lower than the company hoped — and promotional spending was so high that it wiped out any gains in revenue.

Revenue from ready-to-serve soups fell 4 percent. The company says declines in its relatively pricey microwavable soups were responsible for most of that. Meanwhile, revenue from the company’s highly profitable condensed soups, which have had labels redesigned and supermarket displays reconfigured, fell 7 percent.

Broth sales, meanwhile, rose, as people used those products for more holiday meals.

The baking and snacking line, including Pepperidge Farm products, was up 8 percent.

"The overall competitive environment remains challenging throughout the food industry, particularly in the U.S." he said.

Conant said the company plans to do more advertising in the second half of the fiscal year, but go lighter on in-store price promotions.

The Camden, N.J., company earned $239 million, or 71 cents per share, for the period ended Jan 30. That’s down from $259 million, or 74 cents per share, a year earlier.

Revenue dropped 1 percent to $2.13 billion.