As Campbell Moved Money Away From Advertising, Sales Lagged
Posted in: UncategorizedCampbell Soup Co. this winter and spring shifted money from advertising to support promotional programs for retailers, including giving price discounts to a wider set of stores. But the move failed to boost demand as expected and at least one analyst has begun to question the company’s turnaround strategy.
“We’ve been saying for quite some time that promotions are not a sustainable strategy to drive long-term profitable top-line growth, and are disappointed by management’s actions particularly as the firm has been spending to reignite its brand portfolio,” Morningstar analyst Erin Lash wrote in a note to investors. “It is possible this suggests the firm’s new offerings, especially in the soup aisle, aren’t winning consumers over at this juncture.”
The company on Monday lowered its net sales guidance for its 2014 fiscal year to 3% growth from the previous estimate of 4% to 5% growth. The revision came after the company reported disappointing results for its third quarter, which ended on April 27.