Consumer product companies, particularly those that have been around a century or more, don't fail overnight. Campbell Soup (NYSE:CPB) is suffering from years of under-investment in its own internal product development and losing some share to rivals, like General Mills (NYSE:GIS) and private label specialist Treehouse Foods (NYSE:THS). Although new management seems to have the right ideas about how to fix what ails the company, it will take time for those changes to take effect.
A Sluggish Start to the Year
Campbell reported that revenue fell almost 1% to start its fiscal year, as a 3% price increase was offset by a 5% decline in volume. Weakness was unfortunately broad-based. U.S. Simple Meals (which includes the soup business) saw a 7% decline in revenue, as part of an overall 3% decline in revenue. Volume was similarly weak in international soup and the global baking/snacking business eked out 1% organic revenue growth, despite 3% volume erosion.
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