Higher Product Prices Buoy Campbell Soup

In a testament to the importance of raising prices just enough, Campbell Soup Co. saw increased dollar sales and profits in its most recent quarter, even though sales volumes declined slightly.

Net sales for the quarter ending May 1 were $2.13 billion, a 7% rise over the same quarter last year. Adjusted earnings were $321 million, a 23% year-over-year increase. Even though sales volumes declined by 3%, “inflation-driven pricing and sales allowances” of 11% offset that decline and led to the increases.

Campbell CEO Mark Clouse said future price increases are possible, but they will have to be made judiciously. “We’ve got to be very prudent about it,” Clouse told the Wall Street Journal. “Where we may be seeing elasticities begin creeping up, we obviously have to be a lot more careful there.”

Campbell also benefited from a 7% drop in marketing expenses. Advertising and consumer promotions were cut by 16% to reflect ongoing issues with material availability and “the pacing of supply recovery.”