After more than 155 years as Campbell Soup (NASDAQ:CPB), the famous packaged foods company plans to change its name to The Campbell’s Company in the coming months.
Campbell Soup established new long-term annualized growth targets, including organic net sales growth of 2% to 3%.
Campbell Soup stock fell slightly more than 1% on Tuesday and continued to slide on Wednesday morning despite the company’s Tuesday afternoon announcements. This may have been partially due to a rotation from risk-off stocks to risk-on stocks as traders weighed a favorable Consumer Price Index (CPI) print for August.
In addition, while the company will continue to generate revenue from its Snacks division, the company will enhance its focus on its Meals & Beverages division. A major part of this transformation includes Campbell Soup’s prior acquisition of Sovos Brands, which produces the popular Rao’s pasta sauce brand.
It’s not just a name change
Campbell Soup will still sell cans of soup, but the company plans to change its name to The Campbell’s Company. This change is subject to shareholder approval at the company’s shareholder meeting, which is slated to take place in November.
However, CEO Mark Clouse wants everyone to know that dropping the “Soup” from the company’s name isn’t just a superficial change. “This subtle yet important change retains the company’s iconic name recognition, reputation, and equity built over 155 years while better reflecting the full breadth of the company’s portfolio,” Clouse declared.
Clouse and his company are attempting to engineer an outright transformation of Campbell Soup. First of all, the company disclosed a new $250 million “enterprise cost savings program” meant to last through fiscal year 2028.
Furthermore, the firm seeks to transform and put more focus on its Meals & Beverages division. The idea, it seems, is to reduce the company’s reliance on its Snacks division. For instance, Campbell Soup divested its long-standing snacking brand, Pop Secret popcorn, last month.
Thus, Campbell Soup’s management evidently wants consumers and investors to focus less on the company’s old-fashioned soups and snacks, and more on its Meals & Beverages division and the company’s planned cost savings.
Of course, whether the revamped Campbell Soup/The Campbell’s Company can successfully navigate a deep, $250 million cost savings plan remains to be seen.
Campbell Soup touts the popular Rao’s pasta sauce brand
In another sign that Campbell Soup seeks to de-emphasize its Snacks segment, the company previously acquired Sovos Brands. That’s the parent company of the ultra-popular Rao’s pasta sauce.
With the help of Rao’s sales, Sovos Brands’ net sales grew 14% year over year in the quarter ending in July. It appears that Campbell Soup’s management wants to ride Rao’s wave as Campbell’s executives called Rao’s pasta sauce brand “the best growth story in food.”
With Sovos Brands and without Pop Secret and the word “Soup” in its name, Campbell Soup/The Campbell’s Company expects to not only incur substantial cost savings but also sales and earnings growth. In particular, Campbell Soup raised its long-term annualized organic net sales outlook from 2% previously to 2% to 3% currently.
Additionally, Campbell Soup hiked its long-term annualized adjusted EPS growth outlook from 6% to 8% previously to 7% to 9% currently. Only time will tell, however, whether Campbell Soup’s transformative efforts — and the popularity of Rao’s pasta sauce — can provide a sustained boost to Campbell’s top and bottom lines.
On Tuesday and Wednesday, at least, investors apparently remain unconvinced (U.S. inflation figures are currently grabbing the attention). Campbell Soup now has the challenging dual mandates of reducing expenditures while ramping up sales and earnings.
It won’t be easy, so cautious traders might choose to wait and see until Campbell Soup/The Campbell’s Company releases its next quarterly financial results.
