Campbell Soup Co. lowered its fiscal 2010 sales forecast Wednesday as competition heats up in the soup business and said it will cut sodium and revamp the packaging for some of its soups.
The moves come as food makers are competing vigorously to sell penny-pinching consumers meals that are easy to prepare at home and convince them not to trade down to store brands.
The world's biggest soup maker now anticipates full-year sales will rise 2.5 percent to 3.5 percent, down from its prior outlook for a 4 percent to 5 percent increase.
Based on 2009 revenue of $7.6 billion, that implies sales of about $7.79 billion to $7.87 billion. Analysts polled by Thomson Reuters expect 2010 revenue of $7.87 billion.
Speaking to analysts Wednesday at Consumer Analyst Group of New York convention in Boca Raton, Fla., Campbell President and CEO Douglas Conant said the lower revenue expectations reflect what happened in the first six months of fiscal 2010. He said the company would go into detail Monday when it releases its quarterly earnings report.
Campbell, based in Camden, N.J., also maintained its outlook for 2010 adjusted earnings per share to climb 9 percent to 11 percent from fiscal 2009's $2.21 per share. This would put 2010 profit between approximately $2.41 and $2.45 per share.
Analysts predict earnings of $2.46 per share for the year. These estimates typically remove one-time items.
Shares rose 7 cents to $33.66 in midday trading.
In addition, Campbell announced it will tweak more than 60 percent of its condensed soups, reducing sodium in 23 of them by up to 45 percent. Once complete, nearly half of Campbell's condensed soups will have sodium levels at 480 milligrams or less per serving, considered healthy by the U.S. government.
The changes are to show up in August.
Campbell has cut the sodium level in more than 100 of its products — including V8 juices, Prego sauces, Pepperidge Farm breads and its namesake soups — by 25 percent to 50 percent over the past four years.
Other changes in ingredients including moving to entirely U.S.-raised vegetables and a new chicken-roasting process.
The soup maker will also change the cans' labels by using new photographs to play up the soups' appearance. While the cans' iconic red and white coloring will remain, a more contemporary design will be used on most condensed soups. The only soups not in line for packaging updates are chicken noodle, cream of mushroom and tomato soups.
The moves are part of the company's effort to maintain its dominance in the soup market, which includes rivals like General Mills Inc.'s Progresso and ConAgra Foods Inc.'s Healthy Choice. Campbell's soup business brought in more than $1 billion in revenue in fiscal 2009.
In a report last month, research firm Mintel International said Campbell's sales to stores other than Wal-Mart fell 2.2 percent from 2008 to 2009 as some shoppers switched to cheaper store brands. Campbell still is by far the largest player in the soup market, accounting for 47 percent of sales.
Because of its high profit margins, the condensed soup business is a key to the company's profitability.
Campbell also plans to cut costs by offering fewer package types and sizes and even reducing the number of ways it dices vegetables.
President and CEO Douglas Conant said in a statement that the company plans to get more aggressive on the positioning of its ready-to-serve products. To that end, Campbell plans to roll out a new advertising campaign that shows consumers how soup and dishes made with soup can be a "simple meal."
"It appears that soup isn't hanging with some of those simple meal categories at home," David Palmer, an analyst with UBS, told Conant at the convention.
"It's a dogfight there, we're all fighting to get our fair share of those meals," Conant said.