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Campbell Soup Co CPB

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Wide-Moat Campbell Cooks Up Improving Soup Sales in Q1, but Shares Aren't Appetizing

Erin Lash, CFA Sector Director

Analyst Note

| Erin Lash, CFA |

The biggest point of consternation prior to wide-moat Campbell Soup’s first-quarter print was to what extent recent top-line gains (particularly for its namesake brand) would persist during the colder months on its home turf. By all accounts, Campbell’s performance quelled concerns, with a 21% year-over-year bump in U.S. soup sales. This helped drive an 8% increase in consolidated organic sales, reflecting 6% higher volumes and favorable mix combined with a 2% benefit from lower promotional spend. Admittedly, a portion of these gains were attributed to a rebuild of inventory at leading retailers, essential ahead of the all-important second fiscal quarter. However, management suggested that these gains came with an improving share position in condensed and broth soup, which we think illustrates that efforts to reinvest behind innovation and marketing of its core lineup (which began before the onset of COVID-19) could have some legs.

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Company Profile

Business Description

With a history that dates back around 150 years, Campbell Soup is now a leading manufacturer and marketer of branded convenience food products, most notably soup. The firm's product assortment includes well-known brands like Campbell's, Pace, Prego, Swanson, V8, and Pepperidge Farm. Following the sale of its international snacking operations, the firm is poised to derive nearly all of its sales from its home turf. Campbell has made a handful of acquisitions to reshape its product mix the past few years, including the tie-up with Snyder's-Lance (completed in March 2018), which stands to enhance its exposure to the faster-growing on-trend snack food aisle, complementing its Pepperidge Farm lineup.

1 Campbell Place
Camden, NJ, 08103-1799
T +1 856 342-4800
Sector Consumer Defensive
Industry Packaged Foods
Most Recent Earnings Oct 31, 2020
Fiscal Year End Aug 2, 2021
Stock Type High Yield
Employees 14,500