Campbell Soup said Thursday it is selling its international and fresh food businesses as the 149-year-old condensed-soup maker struggles to regain its financial footing and refocus on its signature packaged foods.
The company is unwinding efforts by former CEO Denise Morrison to branch into healthier and more fresh foods to double down on product lines it knows well — snacks, meals and beverages. Morrison's surprise departure was announced in May when the company said it was conducting a top-to-bottom review of its holdings after releasing what executives called "unacceptable" earnings.
The board considered a "full slate of strategic options, including optimizing the portfolio, divesting businesses, splitting the company, and pursuing a sale," Campbell's interim CEO Keith McLoughlin said in a statement. The board concluded that the "best path forward" is to "focus the company on two core businesses in the North American market," he added.
Executives said the company was chasing too many initiatives at once and had little reason or justification to get into fresh food, where it had little experience and no reputation.
"We depended too much on M&A to shape our business strategy," McLoughlin told analysts Thursday morning in an extended 90-minute conference call to discuss its plans.
Its legacy businesses, though, are challenged and mature. Sales in Campbell's U.S. soup business during its fiscal fourth quarter ended July 29 plummeted 14 percent, with it no longer able to simply raise prices to counter shrinking demand, the company said in its earnings release Thursday.
After it sells off the units, Campbell's anticipates earnings of $2.45 a share to $2.53, a nominal increase from $2.40 a share to $2.50 without those sales.
Against that backdrop, McLoughlin stressed several times on the call that the company continues to evaluate all options as it moves forward. In doing so, he left a clear door open to a potential sale in the future.
Campbell has been under pressure from activist shareholder Third Point, which has previously called a sale the only justifiable outcome of the review. When the company announced its review in May, it sparked speculation the process could end in a sale.
Warren Buffett, the CEO of Berkshire Hathaway, dampened speculation that Kraft Heinz would make a play for Campbell Soup, saying on Thursday it is "very hard" to offer a premium for a packaged food company.
Buffett made his comments in an interview with CNBC's Becky Quick ahead of his annual lunch with the winner of the Glide auction at Smith & Wollensky steakhouse in New York.
Buffett, along with private equity firm 3G Capital, is an investor in Kraft Heinz. The ketchup maker has been cited as a logical buyer of Campbell, which activist investor Dan Loeb's Third Point has been pressuring to sell.
The company, which also makes SpaghettiOs, Prego sauces and Goldfish snacks, said it was also raising its overall cost savings target to $945 million by fiscal 2022.
Campbell shares were down more than 2 percent in afternoon trading. The company on Thursday also announced better-than-expected quarterly earnings but disappointing revenue.