UPDATE 6-Campbell cuts sales outlook, keeps earnings view

jueves 18 de febrero de 2010 05:12 CET

   * Cuts 2010 sales growth view to 2.5-3.5 pct from 4-5 pct
 * Plans to overhaul condensed soup line
 * Stands by earnings forecast
 * Could raise long-term goals in next year or so
 * Shares up 0.3 percent
 (Adds more comments from analyst)
 By Brad Dorfman
 BOCA RATON, Fla., Feb 17 (Reuters) - Campbell Soup Co
(CPB.N: Cotización) cut its fiscal 2010 sales forecast as demand flags for
its more expensive ready-to-eat soup, and it also plans to
overhaul the packaging and marketing of its single biggest
product, condensed soup.
 But the company also stood by its 2010 earnings forecast
and CEO Douglas Conant indicated Campbell was poised to raise
long-term growth targets in the next year or so.
 Many packaged foods companies have benefited as consumers
try to save money by eating at home more often. But shoppers
are more selective about what they spend money on and
ready-to-eat has not been enough of an attraction, even during
a particularly cold U.S. winter.
 "Shoppers have become increasingly price-sensitive," Conant
said in a presentation to the Consumer Analyst Group of New
 The company is committed to fixing the "price-value"
equation for ready-to-serve soup, Conant said. Some analysts
said that could telegraph more promotional discounting in order
to jump-start the category. Conant would not give further
details until the company reports quarterly earnings on Monday.
 "As more meals are being eaten at home... it has also
gotten very, very competitive to get your fair share of those
meals," Conant said.
 Campbell's condensed soup business is perceived by
consumers to be "stodgy," said Edward Jones analyst Jack Russo.
But Campbell's Conant said sales of that soup, which is sold in
the iconic red and white can, have done well.
 Russo noted that competitor General Mills Inc (GIS.N: Cotización) has
also seen its Progresso soup business pressured.
 Campbell expects sales to rise only 2.5 percent to 3.5
percent in 2010, down from a prior forecast of 4 percent to 5
percent. The average Wall Street growth forecast was 3.8
percent, according to Thomson Reuters I/B/E/S.
 But it backed its 2010 net earnings per share growth
outlook of 9 percent to 11 percent from fiscal 2009 adjusted
earnings of $2.21. The average Reuters earnings growth estimate
was about 11 percent.
 Campbell is planning $150 million to $200 million in annual
cost savings by cutting down overheads after selling off
several businesses in the past several years.
 The company is also simplifying soup production by using
fewer varieties of ingredients and packaging.
 Conant said the company should be in a position in the next
year or so to raise its long-term earnings and sales goals.
Those goals are currently 3 to 4 percent annual sales increases
and 5 to 7 percent earnings per share growth, excluding
one-time items.
 "We've delivered 8 percent (earnings growth) for the last
five years. We ought to be able to raise our targets."
 But "it would be premature to do that in a time when the
financial world is so uncertain," he added.
 Campbell's condensed soup business in the United States
generated more than $1 billion in net sales in fiscal 2009.
 The company plans to enhance more than 60 percent of its
condensed line with product improvements, further sodium
reduction, updated packaging, improved shelving systems and new
marketing. The new soups will be available in August.
 Consumers have other choices for at-home meals, including
frozen dinners, where manufacturers have aggressively offered
promotional discounts in order to attract consumers.
 "Many, including ourselves, have been somewhat frustrated
by the seeming complacency with which Mr. Conant has addressed
sales issues of late," J.P. Morgan analyst Terry Bivens said in
a research note.
 But he also said that Campbell showed that is was taking
steps to correct the problem.
 "Today's release has a welcome (sense) of urgency to fix
the clear problem," Bivens said. "A broad plan of attack was
laid out in the release."
 Campbell shares closed up 3 cents at $33.62 on the New York
Stock Exchange.
 (Additional reporting by Dhanya Skariachan and Ben Klayman;
Editing by John Wallace, Matthew Lewis and Muralikumar