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Campbell plans a year of investment with new CEO
Campbell Soup raises 2011 forecast; lowers 2012 outlook as it plans investment under new CEO
By The Associated Press

CAMDEN, N.J. (AP) ' The Campbell Soup Co. is trying to reinvigorate its brand of soups and other products and go after a new generation __ a move the company says could mean higher prices for consumers and a year of lower profits for investors.

Denise Morrison, who takes over as CEO on Aug. 1 when Douglas Conant steps down after more than a decade, outlined a new approach during a meeting with analysts on Tuesday that entails adding products, changing the recipe of others and expanding internationally.

Morrison said the company, which is known for its red and white cans, wants to build up U.S. sales to Hispanic consumers and millennials, the generation born after 1979. She said Campbell's main competition isn't other soup makers, but rather a growing range of other simple make-at-home meals.

"These consumers have no intrinsic barrier to soup as a food," Morrison said in a talk in which she acknowledged some company missteps in recent years. "They love soup. But many of them don't connect with our soup products."

Morrison said Campbell will focus less on pushing the volume of sales of its condensed soups ' something that's been a struggle in the past two years. In the first nine months of the company's current fiscal year, U.S. soup sales are down 5 percent.

Instead the company plans to launch high-end soups, among other changes that include broadening its range of food choices. The company is rolling out 27 new soups in the coming year and changing the recipes for 46. The company concedes that it could sell a lower volume of soup in the coming year because of the strategy.

Among the changes, Campbell plans to bring back some higher-sodium soups after several years of working to reduce sodium, sometimes at the expense of taste ' at least in the view of some of most frequent buyers. Additionally, Campbell, which already has expanded its V8 juice line, launching energy drinks and smoothies in some markets, plans to broaden those offerings. It will also roll out Pepperidge Farm Goldfish-shaped crustless bread next week in an effort to capitalize on its high-performing crackers.

In another shift, Campbell plans to grow internationally by buying and partnering with existing companies, particularly in Asia and Latin America. That means not trying to start up in a new country from scratch, as it did four years ago in China and Russia. The company announced two weeks ago that it was leaving the Russian market, but staying in China ' plans it reaffirmed Tuesday.

"We're under no illusions about the challenges we face," she said. "We're aware of the likelihood of considerable inflation affecting our input costs and we know that international expansion can be a risky proposition."

Separately, Campbell on Tuesday said that it anticipates fiscal 2011 adjusted earnings will rise about 1 percent from 2010 adjusted results of $2.47 per share. Its prior guidance was for adjusted earnings to fall 1 percent to 3 percent. Revenue is still expected to be essentially flat.

Analysts surveyed by FactSet predict 2011 earnings of $2.45 per share on revenue of $7.69 billion.

For fiscal 2012, when Campbell plans to focus on investing in the new approach, the company expects adjusted earnings will decline 4 percent to 6 percent, with revenue flat to up 2 percent. Analysts expect full-year earnings of $2.49 per share on revenue of $7.89 billion.

The soup maker gave a long-term outlook for annual adjusted earnings growth between 5 percent and 7 percent and a revenue increase in the range of 3 percent to 4 percent.

As the plans were unveiled, Wall Street seemed to be at least comfortable with the idea of trading off profits in the coming year for a better performance in the future. In afternoon trading Tuesday, Campbell shares were trading at $34.80, up 66 cents or 1.9 percent.

Tuesday was the first time Morrison, 57, gave a detailed outline of her plans for the company. Morrison, a New Jersey native who will be the first woman to lead Campbell, has been an executive with the company for eight years after working at several Procter and Gamble, PepsiCo, Nestle USA, Kraft and Nabisco.

She became heir apparent to the CEO position in September 2010. Since then, as chief operating officer, she has been examining the company's operations.

"In a leadership transition, you have a unique opportunity to look back at what are the lessons learned?" she said. "It's actually exhilarating."

Two weeks ago, she announced a restructuring plan. Besides leaving Russia, it includes eliminating 770 jobs from the company's worldwide workforce of 18,400, many of them through layoffs; beefing up investment in Australia and closing a manufacturing plant in Marshall, Mich.

General Mills Inc., which owns rival soup brand Progresso, plans to announce its plans Wednesday.


Reach Mulvihill at

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