Greenberg: Is 'Challenged Consumer' Really to Blame at Campbell's?

SAN DIEGO (TheStreet) -- Something doesn't smell m'm! m'm! good! at Campbell's Soup (CPB).

In its earnings release today, the company blamed "a challenging consumer environment" for the soggy performance of its soup business, even with the help of promotional activity.

On the company's earnings call, CEO Denise Morrison said:

Overall, organic net sales grew 1% which was 1% below our expectations, and I'm disappointed that we failed to deliver the sales growth that we anticipated in the third quarter.

We believe this is in part a reflection of the persistence of an exceptionally challenging consumer environment as many others in the industry have noted, consumers are suffering from continuing underemployment, reductions in the SNAP Program and rising home, fuel, and healthcare costs.

She's right, except there was a time canned soup was considered recession proof.

Based on these results, apparently it isn't and hasn't been for quite awhile.

Yet a year ago, when the economy arguably was worse, the company's soup business was booming -- up 14%, thanks to a combo of some new soups, a colder winter and higher pricing.

The difference this year: The weather was worse and the consumer, arguably, isn't.

Rather than simply blame tough comps against such a banner performance the year before, Morrison, however, added that bunk about the "challenging consumer environment."

Reality: This isn't about the consumer. It's about canned soup and an increasingly stale portfolio of products.

The proof is in the numbers: Without its $1.5 billion acquisition of Bolthouse Farms two years ago, revenues would be flat, at best. And even with that deal, earnings are below where they were in 2005.

It appears the only challenging thing about the consumer, for Campbell's, is that it isn't increasing the consumer's appetite for canned soup.

Sure, there will be signs of life when new products or new marketing campaigns try to reinvigorate the brand and category. But it appears, after trying the new products, consumers drift away.

Just go back and look at the company's history, over the years, of attempting to reinvent itself. The reinvention is always unsustainable because at its core is a product that, no matter what it tries, cannot get out of its own way. Seems like just yesterday the future of the company was soups in bottles, not cans. Seemed like a good idea at the time!

The good news, according to Morrison: Campbell's share "has remained relatively stable." The bad news: Dollar consumption of soup has slipped. Even the company's Pepperidge Farms brand appears to be stuck stuck in a time warp.

Sadly, that's the image for the company.

Oh, and by the way: If the company somehow beats sales and earnings for 2014, just remember that guidance was cut twice over the past year.

-- Written by Herb Greenberg in San Diego

Follow @herbgreenberg

Herb Greenberg, editor of Herb Greenberg's Reality Check, is a contributor to CNBC. He does not own shares, short or trade shares in an individual corporate security. He can be reached at herbonthestreet@thestreet.com.

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