Campbell Soup Company (NYSE:CPB - News) divulged its new growth strategy which will primarily focus on expanding the company’s three core categories of simple meals, baked snacks and healthy beverages. An improvement in products and packaging is also an area of focus and so is expansion in the international markets. The company is hopeful that the new strategy will yield higher sales growth and superior returns to shareholders.
The company now anticipates net sales for fiscal 2011 to be comparable with the prior year. Adjusted earnings before interest and taxes (:EBIT) are however estimated to decrease 2% while adjusted earnings per share (NYSEArca:EPS - News) are expected to inch up 1% from fiscal 2010 levels.
The new strategic plan will involve investments which will result in fiscal 2012 net sales growth to range between 0% and 2%, EBIT to fall in the range of 8% to 6% and EPS to decline in the range of 6% to 4%.
In the long term, Campbell looks forward to delivering annual sales growth of 3% to 4% with an adjusted EBIT growth of 4% to 6% and EPS rise of 5% to 7%
Recently, Campbell Soup underlined a series of initiatives to enhance its supply chain efficiency and reduce overhead costs. Under its new restructuring plan, the company will make new investments, and outsource and close some operations.
Campbell is expected to eliminate a total of approximately 770 positions across the organization by incurring total pre-tax costs of approximately $75.0 million. This represents about 4% of the company's global workforce of 18,400. The company is planning to cut jobs by the end of July 2011. These initiatives are expected to generate annual pre-tax savings of approximately $60.0 million in fiscal 2012 and $70.0 million in fiscal 2014.
Campbell Soup is one of the world's leading manufacturers of convenience food products. Furthermore, a strong portfolio of well-established brands, including Campbell's, Erasco, Liebig, Pepperidge Farm, V8, Pace, Prego, Swanson and Arnott's, offer a competitive edge to the company and strengths its well-established position in the market.
Nevertheless, Campbell Soup operates in a highly competitive food industry and experiences worldwide competition in all of its principal products from such well-established rivals, such as General Mills Inc. (NYSE:GIS - News), H. J. Heinz Company (NYSE:HNZ - News) and Dole Foods Company Inc. (NYSE:DOLE - News).
Currently, Campbell Soup currently has a Zacks #3 Rank, implying a short-term Hold rating on the stock. The company retains a long-term Neutral recommendation.
More From Zacks.com
- Campbell Soup Company