NEW YORK (TheStreet) -- Campbell Soup (CPB) - Get Report is generating concern among equity analysts after forecasting lower full-year earnings ahead of the peak soup consumption season of late fall and winter.

"Our increased promotional spending in the first quarter behind U.S. soup did not produce the planned volume gains. This result was due in part to even deeper soup promotions by competitors, which we chose not to match," said Campbell's CEO Douglas Conant.

Longbow Research analyst Alton Stump maintained a neutral rating on Campbell pending signs of better-than-expected U.S. demand for the company's soups in the coming quarters. At the same time, he is skeptical of Campbell's ability to materially rejuvenate its soup volumes in the late fall or winter season. "Trends over the last couple of peak winter seasons suggest that CPB's plans to drive growth via increased marketing spending may not lead to desired profit gains, further evidenced by management's most recent negative preannouncement," he said in a client note.

Edward Aaron, an equity analyst at RBC Capital Markets, worried that Campbell Soup could experience further weakening of demand if it was forced to raise soup prices to offset any increase in input costs, he said in a client note.

Campbell now forecasts full-year earnings-per-share growth of 2% to 4% from the fiscal 2010 adjusted base of $2.47. Previously, the company expected growth to be within its long-term target 5% to 7%.

Campbell's fiscal year ends in July.

The company now projects sales growth of 1% to 3% compared with a previously-announced sales growth projection of 2% to 3%.

Campbell's prior sales estimate, stated in its fourth-quarter earnings release dated Sept. 3, was already slightly below the company's long-term growth targets, reflecting, according to the company, challenging economic and consumer conditions.

For the first quarter, Campbell estimates a decline in net sales and EPS of 1% and 6% respectively. Analysts thought there would be an increase in EPS to 91 cents from 87 cents the year before.

In an equity research report, Morningstar analyst Erin Swanson said the inability of Campbell, the dominant player in the domestic soup category, to manage aggressive competition is "troubling" to her. She expects greater promotional spending to continue to play an important role across Campbell's product categories in the coming quarters.

Stifel Nicolaus analyst Christopher Growe also finds the lowered guidance very troubling. However, he thinks that it's harder to blame competitive activity for Campbell's weakness in domestic soups, given that it is a leader in this category and the company's intense promotional activity. "The fact remains that Campbell in our view has not done a sufficient job in appealing to consumers and growing the category," he stated in a client note.

The company is expected to provide more details on its future plans when it reports first-quarter earnings on Nov. 23.

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