Q. I expected big results from my shares of Campbell Soup Co. Why haven’t they done better this year?
F.C., via the Internet
A. The world’s largest soupmaker has seen sales of that product cool off a bit lately, while its marketing and selling costs have risen.
A decline in sales of its ready-to-serve soups, including the popular Chunky brand, has weighed on the stock price. In addition, competitor General Mills launched Progresso microwave soups that could threaten Campbell’s longtime leadership in that category.
Campbell Soup shares (CPB) are down 6 percent this year, following last year’s 31 percent increase.
Meanwhile, its broths and products such as V8 juices, Prego pasta sauce, Pace salsa and Pepperidge Farm bread have enjoyed sales gains.
To focus more on basic meal products, Campbell Soup has put its Godiva Chocolatier brand up for sale. Swiss chocolate-maker Lindt & Spruengli has acknowledged it is exploring a bid for Godiva. The business could sell for more than $1 billion.
Campbell Soup earnings increased 39 percent in its fiscal fourth quarter ended July 29, though results a year earlier were depressed by costs associated with the sale of some operations. The quarterly dividend was recently increased by 10 percent per share.
It is initiating major product launches in China and Russia after careful studies of habits and tastes of consumers in both nations. International sales, including its existing leadership position in Europe, are expected to play a significant role in the firm’s growth.
In China, it is teaming with Swire beverages, the Coca-Cola bottler there, to distribute its broth products. In Russia, it is emphasizing lighter packaging and heartier soups.
Consensus rating on shares of Campbell Soup is between “buy” and “hold,” according to Thomson Financial. That consists of five “strong buys,” four “buys,” and nine “holds.”
Members of the Dorrance family, direct descendants of condensed-soup inventor John Dorrance, own more than 40 percent of Campbell Soup, but they leave management to professionals.
The company recently realigned management, naming Denise Morrison president of its North America soup and beverages businesses. Either Morrison or Larry McWilliams, president of Campbell International, could be next in the line to someday replace 56-year-old Chief Executive Douglas Conant.
Earnings are expected to rise 8 percent for its fiscal year ending in July and 10 percent the following fiscal year. The five-year annualized return is projected to be 7 percent, versus 9 percent expected for the processed and packaged goods industry.
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Andrew Leckey is a Tribune Media Services columnist. E-mail him at [email protected].