CAMPBELL'S REPORTS SECOND-QUARTER DECLINES

Marketing Spending and Lower Soup Sales Blamed for 24% Drop

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NEW YORK (AdAge.com) -- Campbell Soup Co., Camden, N.J., today reported second-quarter earnings declined 24% due to a combination of lower soup sales, increased marketing investment and softness in the Godiva chocolates business.

Sales of wet soup fell 6% in the U.S. for the quarter ended Jan. 27. While marketing investment for the quarter was up 17% overall as part of Campbell's previously announced "transformation plan," efforts against condensed soup remained flat and sales of those brands fell 13%.

The company

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said longer-term investments against product improvements in the areas of quality and convenience will begin appearing in the fall of 2003.

Ready-to-eat soups, including Chunky and Campbell's Select, received the lion's share of soup marketing, and sales of those products grew 1%.

"We have a way to go before we stabilize [the soup] business," a Campbell's spokesman said.

Campbell's attributed weak sales of Godiva to reduced traffic at airport duty-free stores and resort-destination stores after Sept. 11 and the loss of two New York City stores in high-volume areas.

Campbell's stated increase of $200 million against marketing for fiscal 2002, roughly a quarter of that on advertising, has been decreased slightly as the company has taken advantage of lower ad rates in the marketplace, the company said.

The balance of that money, along with an additional $65 million, will be poured into infrastructure costs including research and development and systems upgrades.

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