By MAE ANDERSON, Associated Press
CAMDEN, N.J. (AP) — Campbell Soup Co.'s second-quarter net income fell 14 percent as it spent more on marketing and a cutback in discounting hurt sales volume.
But the results released Friday beat expectations as its soup business improved. The company's stock rose nearly 3 percent Friday.
The company, known for its red and white soup cans, said net income for the three months ended Jan. 29 fell to $205 million, or 64 cents per share. That compares with $239 million, or 72 cents per share, last year. Analysts expected 62 cents per share, according to FactSet.
Revenue edged down nearly 1 percent to $2.11 billion. Analysts expected $2.12 billion.
The Camden, N.J.-based company is trying to regain lost ground after several years of declining soup sales. Shoppers have curbed their soup consumption, stopped stocking pantries or shifted to competitor's brands. Campbell is in the midst of a turnaround plan that includes adding more expensive, higher-quality soups and broadening offerings in its snack, beverage and other categories.
It's also discounting less and raising some prices to offset higher costs, which has led to lower sales and volume but is part of Campbell's plan to improve its overall profit. The company said it expects revenue to improve in the second half of the year as it continues to eliminate heavy discounting.
"We are executing a strategic turnaround in an environment of weak volume and high inflation across the food industry," said CEO Denise Morrison in a statement. "Our first half has been impacted by headwinds in our beverages and Australian businesses, but we continue to make progress against our key growth strategies."
Campbell Soup, which also makes V8 vegetable juice and Pepperidge Farm cookies, is also facing stepped-up competition and cautious consumer spending, like most food makers.
Campbell's soup sales fell 2 percent in the U.S., hurt by weakness in ready-to-serve soups. But the company said the business is stabilizing, and the segment's profit improved for the fourth consecutive quarter.
"We expect improved sales in the second half, as we continue to shift our emphasis to brand building efforts that will drive consumer usage," Morrison said.
Sales of Campbell-brand condensed soups rose 5 percent, helped by holiday sales, and broth sales. But sales of higher-priced ready-to-serve soups fell 12 percent as volume declined.
Sales of sauces fell 2 percent, although Prego pasta sauce sales rose 6 percent, helped by an advertising campaign.
Baking and snacking revenue was flat at $526 million. Beverage revenue rose 4 percent as the company's juice blend, V8 Splash, sold well.
Food service revenue rose 9 percent to $173 million.
Campbell has increased spending on advertising to boost its soup business. Marketing and selling expenses rose 2 percent overall to $297 million.
The company reiterated its earnings and revenue outlook for the full year. It expects revenue to be flat to up 2 percent, which translates to revenue of $7.72 billion to about $7.87 billion. It predicted adjusted earnings of $2.35 to $2.42 per share.
Analysts expect net income of $2.36 per share on revenue of $7.71 billion.
Shares rose 84 cents, or 2.6 percent, to close at $32.90 Friday. The stock had fallen 4 percent since the beginning of the year.
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