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Campbell net to fall short
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January 11, 1999: 1:06 p.m. ET
Soup maker says lower shipments to cut costs in 2Q will reduce profit for year
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NEW YORK (CNNfn) - Campbell Soup Co. said Monday it expects fiscal 1999 earnings to fall between 18 and 23 cents below expectations due to a cost-saving initiative in supply chain operations and decreased condensed-soup consumption.
The company said, however, "substantially all of the shortfall is expected to be in the second quarter."
Analysts polled by the research firm First Call estimated the world's largest maker and marketer of soup would earn 69 cents a share in the second quarter, ending Jan. 31, and $2.13 a share for the year ending July 31.
Campbell (CPB) said the supply chain initiatives, which will lower soup shipments for the second quarter, are expected to save $100 million a year and are intended to improve supply chain management and minimize variability in trade spending, thereby reducing inefficiencies in manufacturing, shipping and product storage.
Noting strong first-quarter performance in the company's ready-to-serve soups such as 'Chunky,' Campbell President and Chief Executive Officer David Morrison said the shortfall expected in the second quarter is due to a weaker performance among its condensed soups.
"Condensed soup got off to a fast start in fiscal 1999, but the unusually warm weather in November and December clearly slowed consumer demand. While we have improved the performance of our condensed soup business, consumption has been below expectations. Condensed soup remains a critical part of our business portfolio and a key growth opportunity.
"Our decision to implement changes in supply chain operations is a difficult one, but it is the right one for the business. The high costs of an inefficient supply chain are simply not acceptable. By moving quickly we will capture substantial savings this year, and be positioned to reap even greater cost savings in fiscal 2000 and beyond," Morrison said.
In addition to soups, Campbell also produces such branded convenience food products as Pepperidge Farm, Godiva, Prego and V8.
On Monday in New York, Campbell shares were taking a beating, falling 6-1/2 to 45-3/4 by early afternoon. 
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Campbell Soup Company
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