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Campbell’s 2011 Earnings Forecast Trails Estimates

Sept. 3 (Bloomberg) -- Campbell Soup Co., the world’s largest soup maker, gave a full-year earnings forecast that trailed some analysts’ estimates as U.S. soup sales slumped 5 percent last quarter.

Earnings will rise 5 percent to 7 percent to $2.59 to $2.64 a share in the year through July 31, 2011, the Camden, New Jersey-based company said today in a statement. Analysts projected $2.64, the average of estimates compiled by Bloomberg. The stock fell 3 percent.

Campbell is vying with food makers touting alternatives to soups, such as macaroni and cheese and frozen pizza, amid tightened household budgets and high unemployment in the U.S. The company plans a new advertising campaign to promote Campbell soup brands in the country, Chief Executive Officer Doug Conant said in the statement.

“It’s starting to feel a little bit like ‘Groundhog Day’ where every year going into soup season everybody’s big bet is whether this year is going to show improvement after a disappointing last season,” said Edward Aaron, an analyst at RBC Capital Markets Corp. in Denver. “We certainly haven’t seen any fundamental evidence to support the view that it will.”

He rates the shares “sector perform.”

Campbell, the maker of Chunky soup and Pepperidge Farm crackers, fell $1.11 to $36.21 at 4:15 p.m., the biggest percentage drop in 8 1/2 months in New York Stock Exchange composite trading. The shares have advanced 7.1 percent this year.

Sales will rise 2 percent to 3 percent in 2011, less than the company’s long-term sales growth target of 3 percent to 4 percent, reflecting the “challenging” economy, Campbell said.

Surgical Buying

“There is a palpable change in consumer buying behavior that is unlike anything we have experienced certainly for a few decades,” Conant said on a conference call. “Mom is not sending the teenagers out to go pick up the groceries now. She’s looking at where the best deal is, and sort of surgically buying.”

Campbell will more precisely adjust promotions and ads depending on the type of store or retail chain, and the season to meet the new reality, Conant said.

Fourth-quarter profit advanced 64 percent, helped by sales of beverages such V8 juices. Net income rose to $113 million, or 33 cents a share, in the period ended Aug. 1, from $69 million, or 20 cents, a year earlier. Analysts anticipated 30 cents on average. Revenue fell less than 1 percent to $1.52 billion.

Advertising Costs

Marketing and selling expenses rose 6 percent to $221 million last quarter, driven in part by increased advertising expenses.

U.S. soup sales fell last quarter after rising 2 percent in the previous quarter. Ready-to-serve and condensed varieties slumped 7 percent each.

Beverage sales in the U.S. jumped 12 percent, as the company sold more V8 juice drinks.

In June, Campbell said it may use proceeds from a debt sale to finance acquisitions that may complement its businesses in simple meals, baked snacks and beverages.

“Reducing dependence on the slow-growth U.S. soup category may be seen as a good strategic move by investors,” Alexia Howard, a Sanford C. Bernstein analyst, wrote in an Aug. 24 report. She rates the shares “outperform.”

(The company held a conference call at 10 a.m. New York time today. Visit: {CPB US <Equity> EVTS <GO>}.)

To contact the reporter on this story: Duane D. Stanford in Atlanta at dstanford2@bloomberg.net

To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net

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