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Campbell Soup's (CPB) Latest Consolidation Move to Fuel Growth

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Campbell Soup Company (CPB - Free Report) unveiled plans to consolidate its Charlotte, N.C. and Norwalk, Conn. Snacks offices into its headquarters located in Camden. Management expects to invest nearly $50 million to improve its Camden facilities over the next three years.

Campbell Soup anticipates realizing cost savings from consolidating the buildings to start in fiscal 2024 and reach annual cost savings of $10 million by fiscal 2026. The realized savings will be reinvested in the business and are included in its plan to enhance margins in the Snacks unit.

Savings Plan on Track

Campbell Soup has been progressing well with its cost-saving plan. The company’s strategy of concentrating on supply-chain efficiencies, curtailing costs and reinvesting part of these savings in high-growth potential areas is noteworthy. In the first quarter of fiscal 2023, the company generated $10 million in savings under its multi-year cost-saving program, including Snyder’s-Lance synergies, bringing total program-to-date cost savings to $860 million. Management is on track to deliver savings worth $1 billion by fiscal 2025-end.

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What’s More?

Campbell Soup is benefitting from its growing Snacks business. The segment formed 43.5% of the company’s top line in the first quarter of fiscal 2023. Net sales in the division rose 15% (also organically) to $1,120 million. The upside can be attributed to sales of power brands which rose 21%. Sales growth was fueled by a rise in cookies and crackers, specifically Goldfish crackers and in salty snacks, Snyder's of Hanover pretzels and Kettle Brand and CapeCod potato chips. Inflation-driven pricing and sales allowances were somewhat offset by soft volume and higher promotional spending.

Campbell Soup’s Snacks unit has been standing out for a while now. This business will likely tap incremental sales, backed by a proven growth model with strength in the power snacks brands and higher innovation.

Such prudent investment and strategic efforts, evident from the latest consolidation of the buildings, are likely to keep narrating CPB’s growth story. The Zacks Rank #1 (Strong Buy) stock has gained 9.4% in the past six months compared with the industry’s 3.4% growth.

3 Solid Food Stocks

Some other top-ranked stocks are Conagra Brands (CAG - Free Report) , Lamb Weston (LW - Free Report) and Mondelez International, Inc. (MDLZ - Free Report) .

Conagra Brands, operating as a consumer-packaged goods food company, currently sports a Zacks Rank of 1. CAG has a trailing four-quarter earnings surprise of 8.9%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Conagra Brands’ current financial year sales and earnings suggests growth of 6.8% and 11.9%, respectively, from the corresponding year-ago reported figures.

Lamb Weston, a leading global manufacturer, marketer and distributor of value-added frozen potato products, currently sports a Zacks Rank #1. LW has a trailing four-quarter earnings surprise of 52.6%, on average.

The Zacks Consensus Estimate for Lamb Weston’s current financial-year sales suggests growth of 20% and 79.3%, respectively, from the corresponding year-ago reported figures.

Mondelez International, which manufactures, markets, and sells snack food and beverage products, carries a Zacks Rank 2 (Buy). MDLZ has a trailing four-quarter earnings surprise of 6.4%, on average.

The Zacks Consensus Estimate for Mondelez’s current financial-year sales and earnings suggests growth of 8.7% and 2.4%, respectively, from the corresponding year-ago reported figures.

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