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Frugal Americans Boost Campbell and Tyson


Chicken soup is good for the soul, as well as the wallet.

The current recession has forced Americans to find new ways to tighten their purse strings as unemployment pushes past 10% and job security is merely a memory. One of the places consumers have cut back most is their meal expenses. People are opting to eat at home more often and seem to be making the best of their food budgets.

Earnings reported Monday morning by the world's largest soup maker, Campbell Soup Company (CPB), and by meat-production company Tyson Foods (TSN) show that consumers have been choosing less expensive options like soup and chicken when considering meals for the family.

Tyson Foods' quarterly earnings showed that sales of chicken were up 8% year-over-year to $2.6 billion, while sales of beef fell 6% to $2.9 billion, and sales of pork fell 13% to $865 million. The company said it expects sales of all three segments to improve in 2010.

Campbell Soup has been trying to better position its budget-friendly product offerings. The company launched a website,, at the beginning of November that gives consumers family-friendly meal recipes, "many of which will feed a family of four for less than $10." The website includes a recipe for "Crowd-Pleasing Tuna Noodle Casserole" that's listed with a cost of $9.29 and a beef taco bake recipe that's listed at a price of $8.14.

"We're observing a fundamental change in how Americans approach the task of planning and preparing dinner for their families," said Charles Vila, Vice President, Campbell's Consumer Insights. "The economic recession has re-focused consumers on making enjoyable meals at home for less money than it would cost to go out."

Campbell Soup reported first-quarter earnings of $304 million, or $0.87 per share, compared to $260 million, or $0.70 per share, in the year-prior. Sales decreased 2% to $2.2 billion. Analysts expected earnings of $0.81 per share on revenues of $2.3 billion.

"Our US soup business faced difficult top-line comparisons with last year's first-quarter when sales increased 12%," said Campbell chief executive Douglas Conant, referring to the slight drop in US soup sales compared with the major jump in sales that occurred when people first started buckling down.

"Looking ahead, we're optimistic about our US soup business, led by the renovated 'Campbell's Chunky' line, innovations in our condensed portfolio and our 'Swanson' broth business," Conant added.

Meanwhile, Tyson lost $455 million, or $1.22 per share, for the fourth quarter ended Oct. 3, compared with a profit of $48 million, or $0.13 per share, in the year-prior period. Excluding an impairment charge of $560 million, or $1.50 per share, earnings were $0.28 per share. Analysts expected, on average, earnings of $0.26 per share. The estimates typically don't include one-time charges. Revenues stayed flat at $7.2 billion, also beating analysts' expectations of $6.9 billion for the quarter.

For the year, the meat-production company reported a loss of $537 million, or $1.44 per share. Excluding the impairment charge from the beef segment, earnings were adjusted to $0.06 per share on revenues of $26.7 billion.

Last week, Tyson named new CEO Donnie Smith to replace interim head Leland Tollett, who had been tapped in January to help weather an industry downturn. Smith was the company's senior group vice president of poultry and prepared foods.

Both companies have seen a gain this quarter form lower commodity and packaging costs.

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