Campbell Soup Co. today (22 July) lowered its long-term sales target, citing "the current conditions in the food industry".
The US food group has made a clutch of acquisitions in recent years to try to improve its growth prospects. However, like a number of peers, the soup maker is being buffeted, particularly in its domestic market, by an increasing number of consumers turning away from foods deemed to be more processed in favour of fresher options.
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Ahead of its annual investor day in New Jersey, Campbell said it is now aiming for sales, on an organic basis, to grow by 1-3% a year, down from its previous target of growth of 3-4%.
Long-term targets for earnings, which exclude currency translation, remain unchanged. It targets adjusted EBIT growing by 4-6% a year and adjusted EPS by 5-7%.
Campbell also revised some of its forecasts for its current financial year, which ends on 2 August. The Prego sauces and Plum Organics baby food owner said "favourable gross margin performance" plus "earlier-than-expected benefits" from its recent moves to cut costs mean it now expects adjusted EBIT to fall by 1-2%, an improvement from its previous forecast of a drop of 5-7%.
The company expects adjusted earnings per share to range from being flat year-on-year to down 1%. Campbell had forecast adjusted EPS to be "at the favorable end" of a forecasted 3-5% fall.
At the investor meeting, Campbell said it would give more details on its recent announcements to reorganise its operations and to lower costs.
However, ahead of the event, Campbell did say it was achieving savings earlier than anticipated based on reductions in headcount, travel, consulting and non-working marketing.
The company now expects around $75m in savings from these cost reduction initiatives in its current financial year. Campbell is increasing its annual savings target from $200m to $250m, which it expects to achieve by the close of fiscal 2018. The business still expects to incur costs of $250-$325m from these initiatives through to fiscal 2018.
