TRENTON, N.J. (AP) â€” Calling their quarterly fiscal results ``unacceptable,'' Campbell Soup Co. executives on Wednesday reported a 14 percent drop in profits, which they blamed primarily on a sharp decline in U.S. soup consumption.
With the previous two quarters also weak and the next likely to be disappointing, the world's biggest soup maker announced a ``back to basics'' plan focusing on its primary product with new soup varieties, more convenient packaging and increased marketing.
Chief executive David W. Johnson said the Camden-based company, which also makes Pepperidge Farm cookies and crackers, Godiva chocolates and Swanson broths, had let its focus drift away from its core business.
Johnson predicted Campbell will get back on track, but it could take awhile if the soup market doesn't rebound.
``We're here today to discuss the gloom and terror of where we are, and yet we've got a 70 percent (soup) market share in this country,'' Johnson told analysts. ``We're not doing too badly.''
For the third fiscal quarter, which ended April 30, Camden-based Campbell reported net earnings dropped to $139 million, or 32 cents per share, from $162 million, or 37 cents per share, a year earlier. Analysts surveyed by First Call/Thomson Financial apparently had forecast earnings per share of 31 cents.
Total sales declined 6.6 percent, to $1.39 billion from $1.49 billion.
``Results in the third quarter are very distressing, completely unacceptable and unprecedented,'' senior vice president F. Martin Thrasher summed it up.
Sales of Campbell's soups dropped 9 percent to $927 million in the quarter, and the earnings contribution from the company's soups and sauces division plunged 18 percent.
That division's decline was slightly offset by a 2 percent sales increase for the biscuits and confectionary division and an 8 percent sales increase for the ``Away from Home'' division, which sells soups to restaurants, college cafeterias and fast food chains such as McDonald's and Subway.
``They tried to chase too much growth and as a result spread themselves too thin,'' said Nomi Ghez, a food analyst and managing director at Goldman, Sachs & Co. ``I expect earnings in fiscal year 2001 to be up only modestly, 6 percent, despite the fact that this year was horrendous.''
The turnaround campaign, set to begin in July, will focus on the company's most popular soups, Chicken Noodle and Tomato. Advertising will ``really exploit'' the cancer-fighting properties and other health benefits linked to tomatoes, Thrasher said.
Campbell's ``Ready to Serve Soups,'' the noncondensed brands such as ``Chunky'' and ``Select,'' will be getting easy-open pull tops. And Super Bowl MVP Kurt Warner will be added to the celebrity team endorsing Campbell products.
Meanwhile, Campbell has temporarily brought back Johnson, one of its most successful leaders as president and chief executive officer, while it searches for a new one. Dale F. Morrison resigned from the post March 22.
Johnson, 67, held the same top posts from January 1990 until he retired in July 1997, a period when Campbell had consistently strong profit increases and saw its market value more than triple to more than $22 billion.