Retailers, consumers and prices
*Corrects blog post from Tuesday to show General Mills’ “World Recipes” soups are ”ready-to-serve” not “ready-to-drink”.
It is not every day that CEOs truly speak their minds about their rivals in public, so we thought we would share.
During Campbell Soup Co’s annual meeting yesterday with analysts and investors, CEO Douglas Conant fielded a question from an analyst about the company’s marketing messaging. The analyst said rival Progresso Soup owner General Mills Inc had recently said it felt that the entire soup category was over-emphasizing the message of convenience and health in its marketing and under-emphasizing taste.
Being the category leader, of course Conant took it to heart.
“This Progresso thing is a joke, I’m sorry,” Conant said. “If there was such an opportunity to talk about taste, why aren’t they talking about it? Why aren’t they growing? Why aren’t they performing? They haven’t innovated, they haven’t carried a convincing message. They’ve lost share, they’ve lost their way, they’re not relevant with the retailer in a significant way in the category. They ought to follow some of their own advice.”
Check out fears of rising costs for U.S. food companies.
Rising commodity costs and promotional discounts are pressuring profit margins for food companies and analysts said more may be on the horizon.
General Mills, whose brands include Cheerios, Green Giant and Haagen-Dasz, said on Tuesday that the gross margin in its most recent quarter was flat, excluding higher ad costs and other items.
Check out the power of new products to get shoppers going.
General Mills reported some pretty good results for its third quarter as shoppers gobbled up its new chocolate Cheerios cereal and the company got a boost from lower commodity costs.
But the sailing wasn’t entirely smooth. Sure, General Mills boosted advertising and media spending by 33 percent. Despite that effort to raise consumer awareness and its choco Cheerios hit, overall sales volume was flat.
U.S. retail sales slumped for the second straight month, coming in weaker than analysts had expected due to sluggish gasoline and electronic goods purchases. Meanwhile, U.S. foreclosure activity in April jumped to a record high, further pressuring home prices and making a recovery tougher.
Fashion company Liz Claiborne posted a deeper-than-expected quarterly loss as retail sales remained weak in the recession. The owner of Juicy Couture, Kate Spade, Lucky Brand and Mexx labels is cutting jobs, scaling back expansion and offering more lower priced items to combat the slowdown.
The maker of Progresso soups, Hamburger Helper and Green Giant frozen vegetables posted a disappointing profit for its fiscal third quarter. Even its slightly higher full-year outlook is below Wall Street’s expectations.
But here’s an interesting twist — the company saw strong sales of cereals, soups, frozen vegetables and refrigerated dough during the quarter, in a continuing trend whereby consumers are eating more meals at home to save some money in the recession. But while that helped sales in the U.S. retail segment, the bakery and food service segment languished, as consumer thrift led to fewer trips to restaurants and cafeterias.
Both food makers reported lower profits on a net basis.
But excluding various items, their earnings were stronger than analysts were expecting.
On Friday, fresh data showed the U.S. economy shed 240,000 jobs in October, worse than the 200,000 decline that was forecast. The Labor Department said the national unemployment rate shot up to 6.5 percent from 6.1 percent in September — the highest since March 1994.
That disappointing report came a day after U.S. retail chains reported their worst October sales results in 35 years.
Check out rising profit at General Mills
The maker of Cheerios cereal, Green Giant vegetables and Yoplait yogurt said cost cuts and worldwide demand aided results in its third quarter. Sales rose 16 percent in both its snacks and baking products divisions and 14 percent for Yoplait.
Still, not all is rosy in this challenging economic environment. General Mills expects higher input costs in the current quarter and said it plans to invest in consumer marketing to help drive sales.