With a view to synchronize its organization structure and key growth strategies, Campbell Soup Company (CPB) has decided to realign its reporting segments from five to three. The company’s operating segments will now be structured on the basis of product categories instead of geographies or brand groups. The new segments will be named Americas Simple Meals and Beverages, Global Biscuits and Snacks and Packaged Fresh.
With this reorganization, the company aims to craft a meaningful scale, establish clearly defined portfolio roles and growth targets, which will be linked to each segment’s role in the organization and its scope for opportunities in the marketplace.
The Americas Simple Meals and Beverages will be realigned to include the U.S. Retail and foodservice businesses, Plum Organics and simple meals and shelf-stable beverage businesses in Canada, Mexico and Latin America. The operations which are to be included in this new segment generated net sales of about $4.5 billion in fiscal 2014. The company expects this segment to serve as a key economic engine for the enterprise by delivering decent revenue growth and significant margin expansion.
The Global Biscuits and Snacks segment will bring together the Pepperidge Farm, Arnott’s and Kelsen businesses. Additionally, this segment will include the existing simple meals and beverage businesses in Asia Pacific and Asia and the Pepperidge Farm U.S. bakery business. These assets generated net sales of nearly $2.8 billion in fiscal 2014.
With this segment, the company expects to further grow its biscuits and snacks businesses in the developed markets while expanding into the developing markets by utilizing its existing assets and expertise in these categories as well as venturing into the creation of additional multinational brands.
Under the Packaged Fresh segment, it intends to include the Bolthouse Farms’ portfolio of fresh carrots, super-premium beverages and salad dressings and Campbell’s retail refrigerated soup business. These businesses contributed about $1 billion to net sales in fiscal 2014. This segment focuses on expanding the company’s scale and tapping growth from the quickly expanding packaged fresh section and categories.
Further, the company has decided to simplify and streamline its management structure in connection with this realignment. Taking the first step in this direction, the company announced the appointment of executives who will lead the newly formed segments.
These newly appointed executives include Mark Alexander as President – Americas Simple Meals and Beverages, Luca Mignini as President – Global Biscuits and Snack and Jeffrey Dunn as President – Packaged Fresh. Additionally, the changes included the departure of Irene Chang Britt, President – Pepperidge Farm and Senior Vice President – Global Baking and Snacking, from the company.
The newly appointed leaders of the three segments will directly report to Denise Morrison, President and Chief Executive Officer of Campbell, and will assume their new roles from Feb 1. In the initial months, these leaders, together with Morrison and the members of the Campbell Leadership Team will focus on formulating defined plans for the systematic functioning of the three new segments and hiring people for the key positions.
Simultaneously, management will focus on the restructuring of Campbell’s corporate functions, focused on effectively supporting the business segments, while reconsidering and revising the company’s cost structure.
We believe this move will prove beneficial for the company as it aligns its business operations directly with the goals set for each operation. Further, it will help unleash significant brand value and boost its growth potential.
Other Stocks to Consider
Currently, Campbell Soup carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the same industry include SUPERVALU Inc. (SVU), Sysco Corp. (SYY) and United Natural Foods Inc. (UNFI). While SUPERVALU sports a Zacks Rank #1 (Buy), Sysco and United Natural Foods carry a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment