The word soup will be dropped from the Campbell name under new company branding as the snacks to meals and beverages maker adopts fresh financial targets.
Campbell Soup Co. will become The Campbell’s Company once approved by shareholders at a November meeting to better reflect the composition of the portfolio, although soup will still be part of the product offering.
Nasdaq-listed Campbell transformed its product line up last year when it announced the acquisition of Sovos Brands, a deal approved by regulators in March and which included Rao’s Italian sauces, ready meals and frozen pizza.
Meanwhile, a number of other businesses, such as Emerald Nuts, Plum Organics baby food and Arnott’s snacks, have been sold off in recent years.
At an investor day event yesterday (10 September), Campbell unveiled a new set of long-term targets – organic growth of 2-3%, up from around 2% previously, an adjusted EBIT accretion of 4-6% and adjusted EPS progression of 7-9%.
Results for the 2024 fiscal year issued in August, showed a 1% decline in organic growth to $9.6bn, while adjusted EBIT rose 6% to $1.5bn. Adjusted EPS was up 3% at $3.08.
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By GlobalDataPresident and CEO Mark Clouse said yesterday: “For the last five years, we have been on a transformative journey to redefine our company. Our focused strategy has positioned us well and helped to solidify a foundation that has delivered consistent and dependable results.
“We are ready to turn the page and enter a new chapter where we build on Campbell’s transformed portfolio, strong team, and aligned and engaged culture with the goal to set the standard for performance in the food industry.”
Within the group organic growth algorithm, Campbell expects a “historically consistent” 3-4% in snacks and 1-2% growth for its meals and beverages division, which includes the Sovos Brands line-up.
“Sustainable growth” on the top line will support EBIT progression, helped by the introduction of a $250m cost-savings programme through the 2028 financial year, replete with space for reinvestment in the business.
CFO Carrie Anderson said: “With a refreshed long-term algorithm, we have a clear roadmap for multi-year top- and bottom-line expansion. Our investor proposition is compelling, with strong and growing internal cash flow generation, providing multiple paths to create shareholder value.
“Our execution and capabilities to enable top-tier performance have never been stronger.”
Campbell said 84% of net sales in fiscal 2024 and 95% of operating income were concentrated in 16 “leadership brands”, with 3% of net sales coming from group product innovation.
It identified three $1bn brands – Goldfish, Campbell’s Soup and Pepperidge Farm – closely followed by Rao’s sauces at $900m.
The company said volumes are recovering with cost inflation now largely under the bridge, setting the stage for margin improvement. The operating margin for snacks is expected to tick up from 15% in fiscal 2024 to around 17% in the 2027 financial year, while the margin for meals and beverages is targeted to increase from 17.3% to about 19%.
Alexia Howard, an analyst for food at US investment bank AllianceBernstein, was impressed by the margin ambitions.
“Overall, it seems as though the acquisition of Sovos, which is expected to achieve mid-to-high-single-digit growth split 75% in sauces and 25% into other adjacent categories, is unlocking new confidence across a management team that has weathered many years being dogged by lacklustre top- and bottom- line growth,” Howard wrote in a research note.
“While margin targets set in fiscal year 2021 were not achieved, much of this is more to do with the outsized wave of cost inflation that rolled through the sector in fiscal year 2022.
“It seems that this time around, the financial algorithm looks more doable, especially with stepped-up marketing and innovation, further productivity savings with very specific margin expansion plans and the benefits of the Rao’s brand.”
For fiscal 2025, Campbell guided to organic net sales growth of 0-2%, adjusted EBIT of 9-11% and adjusted EPS of 1-4%.
Clouse added: “With the top team, the best portfolio of brands, a track record of strong execution and performance, and a commitment to building on our legacy of trust and impact, we have never been more prepared to deliver top-tier performance and to be the most dependable and most capable company in food.”
Soup has been part of the Campbell name since 1922 but the company originated as Anderson and Campbell in 1869.
Clouse described the new name at Campbell as “part of its evolution and transformed portfolio”.
“This subtle, yet important change, retains the company’s iconic name recognition, reputation and equity built over 155 years, while better reflecting the full breadth of the company’s portfolio,” he said.
