In a tacit acknowledgement that it probably has taken soup as far as it can, Campbell Soup Co. is undertaking a reorganization and cost reduction program meant to "invest more of our resources in the areas of our business that can deliver the greatest growth," said CEO Denise Morrison.
Speaking at the Consumer Analyst Group of New York (CAGNY) conference in Florida, Morrison said the company is reorganizing into three divisions.
Americas Simple Meals and Beverages will include the legacy soup business, the new cooking sauces, the Plum Organics baby and toddler foods and V8 shelf-stable beverages. Sales were approximately $4.5 billion last year, about 55 percent of total company sales but 70 percent of total operating earnings. Mark Alexander will be president.
Global Biscuits and Snacks will unify Pepperidge Farm, both cookies and crackers, with the more recent and global acquisitions: biscuit-makers Kelsen in Europe and Arnott's in Australia. With sales of approximately $2.8 billion, this division will be about one-third of company sales and one-quarter of operating earnings in fiscal 2014. Luca Mignini will be president.
Packaged Fresh will house the products acquired with Bolthouse Farms, including refrigerated drinks, carrots and salad dressings, plus Campbell's new refrigerated soups business. These businesses accounted for approximately $1 billion of net sales – about 11% of company sales – and generated 5% of company operating earnings in fiscal 2014. Jeff Dunn will be president.
"The changes now under way at Campbell have far-reaching implications for the conduct of our business and the future of our company," Morrison said. She said the company was responding to "seismic social shifts," including "revolutionary changes in the definition and composition of the family," and a growing suspicion of "Big Food."
Perhaps as part of that, the company plans to launch "super-premium cold-pressed beverages" later this year under the brand "1915."
Morrison revealed the plan a week after the company lowered its previous full-year sales and earnings guidance for fiscal 2015, based on its expectation that results for the second quarter and the remainder of the year will be weaker than anticipated, including the negative impact of foreign currency translation.
For the full fiscal year, the company now expects that the year-over-year change in net sales will be in the range of -1% to +1%, reflecting the negative impact of currency translation, which is currently estimated at 2 percentage points. Earnings before taxes will decline by -7% to -5%, but earnings per share will be in the range of $2.32 to $2.38.
Campbell's fiscal year ends around July 28.