Executive Business Briefing

Feb. 13, 2003 at 11:06 AM

Here is a look at Thursday's top business stories:

Earnings rise at Campbell Soup

CAMDEN, N.J., Feb. 13 (UPI) -- Soup making giant Campbell Soup Co. said its second-quarter net income for the period ended Jan. 26 rose to $231 million, or 56 cents a share, from $203 million, or 49 cents a share during the same period a year earlier.

Analysts had expected Campbell Soup to post a net income of 55 cents a share, according to market research firm Thomson First Call.

Net sales rose 6 percent to $1.91 billion from $1.81 billion a year ago.

Second quarter U.S. wet soup shipments rose 4 percent. Outside of the United States, wet soup shipments declined 1 percent, resulting in a 2 percent increase worldwide.

"We delivered a solid financial performance this quarter," Douglas R. Conant, president and chief executive officer, said. "In U.S. Soup, our quality and packaging improvements, as well as our innovation efforts, are beginning to have a positive impact on our results."

He said the company had experienced significantly improved consumer purchasing trends since it began marketing improved condensed vegetable soups. He said that was aided by Campbell's chunky and select soups, as well as Campbell's soup at hand sippable soups.

"Swanson broth continued to show strength over the Thanksgiving and Christmas holidays," he said. "However, we know we still have more work to do to improve our overall marketing effectiveness in U.S. Soup."

Looking ahead, Conant said the company continues to expect earnings per share, before the cumulative effect of the accounting change, of approximately $1.47 for fiscal 2003. This compares to $1.28 a share as reported in fiscal 2002, or $1.44 when adjusted for amortization expense of a 13 cent a share and costs of 3 cents a share related to the Australian reconfiguration.

For the third quarter of 2003, the company expects earnings per share to be in the range of 25 to 27 cents a share.

May Department Stores posts lower results

ST. LOUIS, Feb. 13 (UPI) -- May Department Stores Co., parent of Lord & Taylor and Filene's, said its fourth-quarter net income before division combination costs fell to $391 million, or $1.28 a share, from $431 million, or $1.36 a share during the same period a year earlier.

Including costs, the retailer posted a net income of $387 million, or $1.26 a share. During the quarter the company recorded $6 million, or 2 cents a share, as division combination costs for the closure of its Arizona Credit Center and realignment of its data centers.

Analysts on Wall Street were expecting May to report a net income of $1.20 a share, according to Thomson First Call.

The retailer said last week its fourth-quarter sales dropped 4.4 percent to $4.37 billion. Quarterly sales at stores open at least a year, a key retail measure known as same-store sales, were down 6.0 percent.

Gene S. Kahn, chairman and chief executive officer, said, "This was a disappointing year for us, and we are not satisfied with our sales or earnings results. It is not the performance we expect of ourselves. Despite the disappointing 2002 results, we did make significant progress in implementing key strategies and objectives."

Looking ahead, the company said it plans to open 11 new department stores in 2003, including three Foley's stores and three Kaufmann's stores.

Office Depot posts higher earnings

DELRAY BEACH, Fla., Feb. 13 (UPI) -- Office Depot Inc., the nation's largest office products retailer, said its fourth-quarter net income rose despite a sales decline at North American stores open at least a year.

The company said its fourth quarter net income rose to $62.9 million, or 20 cents a share, from $40.3 million, or 13 cents a share, during the same period a year earlier.

Excluding one-time items and discontinued operations, Office Depot said it posted a net income of 23 cents a share.

Analysts on Wall Street were expecting the company to report a net income of 22 cents a share, according to Thomson First Call.

The company, which currently operates 885 stores and 39 delivery centers, said its sales rose 2 percent to $2.8 billion.

Sales at North American stores open at least a year fell by 4 percent. In December, the company said it expected North American sales at stores open at least one year, or same-store sales, to be down in the low single digits. But it still expected to hit its earnings target for the quarter because of tight cost controls and improving gross margins.

Bruce Nelson, chairman and chief executive officer, said, "2002 was a year of tremendous achievement at Office Depot. We relentlessly pursued our objective of profitably growing our business, with a keen eye on driving shareholder value across all of our business channels.

"We remained focused on providing fanatical customer service, while managing costs and investing a disproportionate amount of our capital to growth in Europe, our fastest growing, most profitable business segment. Our experienced senior management team made the right decisions to manage the business this year, and we reaped the rewards in generating a 48 percent increase in earnings per share following a strong performance in 2001," Nelson said.

Looking ahead, Nelson said, "As we look forward to 2003, we do not see many encouraging signs that we can expect a significant improvement in the overall economic environment during the first half of the year.

"As a result, based on this very early view of 2003, we now believe that earnings per share growth this year will be in the range of 5 to 10 percent over 2002 earnings per share of 98 cents a share. This does not reduce our longer-term outlook for our business, but simply reflects our conservative view of the broader economy," he said.

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