The world's top soup maker Campbell Soup's
A look at the numbers
Total revenue for the quarter rose 6% to $1.61 billion from $1.51 billion a year ago. Strong sales of Goldfish crackers and Milano cookies, among other items, helped send revenue higher.
To correct the ongoing slump in its U.S. soup segment, the company spent more on advertising than promotional discounts. This helped improve earnings in this segment but led to a decline in overall soup sales as consumers sought out cheaper brands. Strong competition in this space from brands such as Progresso by General Mills
Higher commodity costs resulted in cost of goods rising to $968.0 million from $905.0 million, up 7% on a year-on-year basis. However, Campbell did somewhat manage to offset higher input costs through price increases. Unfortunately, new Chief Executive Officer Denise Morrison said she expected soup sales to decline in the near future as consumers take time to adjust to higher prices.
Campbell ended the quarter with a net income of $100 million, down 12% from the same quarter last year. This included a $63 million charge related to restructuring. These charges included initiatives to reduce overhead costs as well as the closure of its Moscow office and costs associated with the closure of Russian operations.
The Foolish bottom line
The next fiscal year will be a period of transition as CEO Denise Morrison takes over the company's reins. In an earlier article I had spoken about the initiatives she plans to bring to bolster the U.S. soup segment. Will these initiatives pay dividends in the long run and help correct flagging sales? I think it is still some time away.
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Shubh Datta doesn't own any shares in the companies mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.