Will Fiscal 2015 Growth Plans Help in Campbell's Turnaround?


Campbell Soup Company (CPB) yesterday revealed its growth plans for fiscal 2015 as well as the actions that are being taken to revive its business. The company’s growth plans for fiscal 2015 include the launch of more than 200 new products catering to the changing tastes, preferences and needs of consumers. Additionally, the company remains focused on strengthening its core business along with expanding into faster-growing regions, aiming to become a profit making company with $10 billion in sales within the next five years.

Along with its strategic growth plans, the company reiterated its forecast for fiscal 2014 which end on Aug 3, 2014. The company forecasts nearly 3% growth in net sales while adjusted EBIT is expected to grow at the low end of the 4%—6% range. Adjusted EPS for the fiscal is projected to be at the bottom end of the $2.53—$2.58 range, representing growth at the lower end of the 2%—4% range.

Though Campbell did not provide its guidance for fiscal 2015, it expects results for the year to be driven by strong organic sales stemming from upgrade of its key categories, sustained growth from its innovation platforms, progress in its U.S. Beverages and Australian businesses and contribution from the recent acquisitions.

Moreover, the company anticipates gross margin to remain at par with projected fiscal 2014 levels. Additionally, the company expects to resume its share repurchase program, which was suspended following the Bolthouse Farms acquisition in 2012, in fiscal 2015.

Further, looking at the longer term outlook, the company continues to expect sales growth in the 3%—4% range with adjusted EBIT growth of 4%—6% and adjusted EPS growth of 5%—7%. Though the company remains confident of organic sales growth in fiscal 2015, it still expects results to be below the above mentioned long-term growth target.

The company plans to initiate strengthening its core business with the U.S. Simple Meals focused on soups, followed by stimulating its U.S. Beverages segment including the V8 brand. Moreover, it plans to improve growth at Pepperidge Farm and alleviate its Australian business, which includes “Arnott’s” sweet biscuits.  

On the other hand, its efforts to expand into faster-growing regions will include promoting innovation, strengthening its position in packaged fresh foods, expanding its footprint in the developing markets of Asia and Latin America and making its products available in all channels.

Major product launches in fiscal 2015 will include Bolthouse Farms’ first Kids line with Smoothies, Fruit Tubes and Veggie Snackers, Campbell’s first range of branded organic soups in six delicious flavors, 22 new “Plum Organics” products in the organic simple meals and snacks for infants, toddlers and children, new on-trend vegetable juices under the “V8” brand, “V8” Protein Shakes and Protein Bars, new “Campbell’s” Soups for Easy Cooking, Pumpkin Spice “Milano” cookies and two varieties of soft-baked Coffee Shop cookies from Pepperidge Farm and “Arnott’s” on-trend varieties of “Tim Tam” like red velvet to be launched in Australia.

Other Stocks to Consider

Currently, Campbell Soup carries a Zacks Rank #4 (Sell). Better-ranked stocks in the food space include Treehouse Foods Inc. (THS), Pinnacle Foods Inc. (PF) and Phibro Animal Health Corporation (PAHC). While Treehouse carries a Zacks Rank #1 (Strong Buy), Pinnacle Foods and Phibro Animal Health have a Zacks Rank #2 (Buy).

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