Campbell Soup Co. will raise prices on its condensed soups by 5% in June as the company tries to turn itself around amid sliding profits.
Blame high production costs and continued inflation for the price increase, according to Campbell Senior Vice President B. Craig Owens in a conference call with analysts. The company previously raised its soup prices 5% in June 2011.
Sales for the soup segment – Campbell’s most famous – fell 3% for the third quarter, which ended April 29. Overall, sales inched up 0.4% to $1.82 billion. But profit slid 5.3% to $177 million, or 55 cents per share, from $187 million, or 57 cents per share.
“I’m not happy with our U.S. soup performance this quarter,” said Chief Executive Denise M. Morrison in the call. “I know we can do better.”
The Camden, N.J. company is in the midst of a transformation that is “not a simple course correction,” according to Morrison. Campbell, which also makes Pepperidge Farm cookies, Prego Italian sauces, Swanson broths, V8 juices and more, boosted its advertising and promotion efforts by 13% and plans to spend $100 million building its brand this year.
But consumers, especially ones in developed markets, are facing economic pressures, Morrison said. As a result, they’re visiting stores less often and spending less money when they do shop.
“This is the new reality we face,” she said. “The story is a familiar one … Consumers are making different choices including where they shop, what they purchase and how tightly they manage their food budgets.”