Campbell Soup Co.'s share of the U.S. canned soup market fell in the year ended April 18 as money-conscious shoppers reached increasingly for cheaper store brands, the Camden food company said Monday.
"Shopping trips are down. Consumers are incredibly price sensitive," Douglas R. Conant, Campbell's president and chief executive, told analysts on a conference call to discuss the company's third-quarter earnings.
The company reported 7 percent sales growth for the quarter ended May 2. The increase to $1.8 billion from $1.7 billion received a 5 percent boost from the translation of oversees results into the stronger U.S. dollar. Discounts designed to win back consumers who have been opting for cheaper alternatives cut revenues by 3 percent.
A bright spot for the company was a 13 percent increase in the sale of V-8 juices.
Despite the sales gain, net income was off 3 percent, to $168 million, down from $174 million, largely because of expenses related to a previously announced restructuring program and to the new U.S. health-care law. Excluding the charges, Campbell's profit climbed 9 percent, to $186 million from $171 million.
Sales of Campbell's soups, the firm's biggest source of profits, were up 5 percent in term of units, but up only 2 percent in dollar terms because of special offers.
Jonathan Feeney, an equity analyst who follows Campbell for Janney Montgomery Scott L.L.C., said he was encouraged that promotions seemed to be boosting volumes.
"We think Campbell needs to spend and promote behind the brands that are in harmony with consumers' desire for taste and value. Clearly some value is being offered and, on a limited basis, it's working," he wrote in a note to clients.
Campbell remains the leader in canned soup sales, with a 63.4 percent market share, according to the company's presentation Monday. Sales of its soups, including its signature condensed soups, as well as Chunky and Select Harvest brands, were off 3.6 percent in the 52-week period through mid-April.
But other non-store brands, including Campbell's rival Progresso, sold by General Mills Inc., were off 4.3 percent, according to Campbell's estimates, which capture about 90 percent of the category. Overall soup sales were off 2.7 percent.
Traditionally cheaper store brands were the winners, up 6.7 percent, but they account for only 12 percent of the category.