CORRECTED - UPDATE 3-Campbell Soup raises outlook, shares edge up

(Corrects paragraph 3 to make clear that Campbell's soup
sales, not overall sales, jumped 12 percent last year)

* Q1 EPS $0.87 vs Wall St view $0.81

* Sees FY10 sales up 4-5 pct, EPS growth of 9-11 pct

* Q1 sales down 2.1 pct to $2.2 bln

* Shares up 0.5 percent in late morning trading

By Phil Wahba

NEW YORK, Nov 23 (Reuters) - Campbell Soup Co (CPB.N)
reported a higher-than-expected quarterly profit on Monday,
helped by price increases and easing costs for ingredients
including grains that offset a drop in sales.

The world's largest soup maker also raised its sales and
profit expectations for the fiscal year and its shares advanced
0.5 percent.

Sales fell 2.1 percent to $2.2 billion from a year ago,
when Campbell's sales jumped 3 percent in the wake of a
financial markets crisis. U.S. soup sales were down 3 percent
during the first quarter, following a 12 percent jump in the
year-earlier quarter.

The company, whose other brands include Pepperidge Farm
cookies and Prego pasta sauce, has benefited in the last year
as consumers prepared more meals at home. The company has also
reined in costs, allowing it to increase its gross margin to
41.9 percent from 38.7 percent a year earlier.

Campbell's saw sharp declines in its ready-to-serve soups
such as its Select Harvest line, although sales of its Chunky
soups rose.

"We built momentum in the latter part of the quarter when,
as planned, we significantly stepped up our marketing and
merchandising programs," Chief Executive Douglas Conant said in
a statement.

Campbell earned $304 million, or 87 cents a share, in the
first quarter that ended Nov. 1, up from $260 million, or 70
cents a share, a year earlier. Analysts, on average, had
forecast 81 cents per share, according to Thomson Reuters
I/B/E/S.

IMPROVING SOUP SALES

In a call with analysts, Conant said U.S. soup sales were
improving and had risen 10 percent in October. A sluggish U.S.
economy and high unemployment are likely to keep shoppers
turning to its brands, analysts said.

"Consumers are eating more meals at home, and that plays to
their strengths," said Jack Russo, an analyst with Edward
Jones.

Russo said the company's condensed soup products in
particular were benefiting but that some of Campbell's higher
end products, such as its Pepperidge Farm line, were flat as a
result of shifting customer spending.

On the call, Conant said that the company was competing
"ferociously" with products such as frozen meals.

For the year, Campbell now expects sales to rise 4 percent
to 5 percent, versus a prior forecast of 3 percent to 4
percent. It forecast fiscal 2010 adjusted earnings per share
would rise 9 percent to 11 percent, including an expected lift
from currency translation. It previously forecast a 5 percent
to 7 percent gain.

Campbell's shares were up about 18 cents, or 0.5 percent,
at $34.30 in late morning trade on New York Stock Exchange
trading.
(Reporting by Phil Wahba, editing by Maureen Bavdek, Dave
Zimmerman)
((phil.wahba@thomsonreuters.com; + 1 646 223 6128; Reuters
Messaging: phil.wahba.reuters.com@reuters.net))