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Campbell restructures
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April 16, 2001: 11:09 a.m. ET
Splits operations in two to boost soup sales; says no layoffs, charges result
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NEW YORK (CNNfn) - Campbell Soup Co. Monday said it planned to split its soup business from its beverage and sauce businesses in a continuing effort to boost North American soup sales.
The Camden, N.J.-based company will have two separate units for North American business, one dedicated to soup and the other dedicated to beverages and sauces, such as V-8 brand drinks and Prego brand sauces.
Campbell, the world's biggest soup maker, also will put a support unit in place to provide functional services such as supply chain, sales, finance and human resources, which the company hopes will free its business units to focus on marketing and boost sales.
"Our number one priority is to revitalize our North American Soup business," Campbell Chief Executive Douglas Conant said in a statement. "This new organizational alignment is designed to sharpen our focus on consumer marketing and competitive strategies for soup."
The restructuring will take place over the next "several weeks," will not cost the company any money, and will have no effect on its work force of about 22,000 employees, according to Campbell spokesman Jerry Buckley.
One Campbell employee will be effected by the restructuring, however: Martin Thrasher, 50, former head of Campbell North America, is leaving the company, Campbell said.
Andrew Hughson, 46, will become president of the new North American Soup division, reporting directly to Conant, who became CEO on January 8 and began looking for a way to free up Campbell's business units to focus on marketing.
A 'positive move'
UBS Warburg analyst John O'Neil said the restructuring is a "positive move" that will have no impact on earnings, will cut costs and will most importantly help Campbell's sales in the long run.
"There will be some cost savings that come out of this, but the focus is not on cost savings," O'Neil said. "It's on setting the right structure to grow the business."
Campbell (CPB: up $0.05 to $29.60, Research, Estimates) in February warned its fiscal third-quarter earnings, due to be reported on May 17, would miss analysts' expectations as a result of increased spending on marketing. The company said it would earn 28 to 30 cents a share in the quarter, while analysts at the time expected it to earn 32 cents, according to earnings tracker First Call.
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The company reintroduced its famous "M'm! M'm! Good!" advertising slogan earlier this year as part of an effort to pay closer attention to marketing. The campaign, along with cold winter weather, helped to boost second-quarter sales.
O'Neil said he was not concerned by the short-term earnings impact of Campbell's increased marketing activity.
"Campbell is not a short-term story," O'Neil said. "This is a company that historically has not put enough marketing behind its business, and that's what they need to do. This year is a transition year." 
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