UPDATE 3-Campbell CEO to step down, likely successor named

Tue Sep 28, 2010 8:33pm EDT

* CEO Conant to step down on July 31, 2011

* Denise Morrison named COO, is expected to become CEO

* Campbell stock down slightly in after hours (Adds comments from CEO, analyst; byline)

By Martinne Geller

NEW YORK, Sept 28 (Reuters) - Campbell Soup Co (CPB.N) said on Tuesday that Chief Executive Douglas Conant would step down next summer after more than a decade leading the world's largest soup maker.

Conant, 59, plans to leave on July 31, 2011, the end of the company's current fiscal year. He became CEO in January 2001.

Denise Morrison, president of Campbell's' North American soup, sauces and beverages business, was named executive vice president and chief operating officer, effective October 1, and she is expected to succeed Conant as chief executive at the start of fiscal 2012, the company said.

Campbell shares fell 0.6 percent to $36.20 in light trading after-hours.

The timing of the announcement was surprising given that the weather is turning colder, marking the start of soup's key selling season, and the company is in the middle of a battle to revitalize its North American soup business, analysts said.

But Morrison, 56, had been expected to succeed Conant eventually, said Jack Russo, an analyst at Edward Jones.

"If you look at her track record, she has had a ton of experience in the industry," Russo said, noting her stints at Kraft Foods Inc KFT.N, PepsiCo Inc (PEP.N) and Procter & Gamble Co (PG.N).

Morrison, who first joined Campbell in 2003 as chief customer officer, has helped boost sales in products like V8 vegetable juice.

But the North American soup business has struggled amid tough competition from the makers of frozen foods and other simple meals. Campbell has reduced sodium in its soups and overhauled its Chunky soup line, but sales remain challenged.

"There was some frustration with the economy slowing and people getting more thrifty and eating at home that the category didn't do better," Russo said.

Campbell shares fell 3 percent earlier this month after it posted lower-than-expected quarterly sales and gave a disappointing sales outlook for the new year, after U.S. soup sales fell 5 percent in the quarter ended Aug. 1. [ID:nN03271791

MISSION ACCOMPLISHED

Since January 2001 when Conant, then-president of Nabisco Foods, was named CEO, Campbell's shares have gained nearly 11 percent. By contrast, the Standard & Poor's 500 Index .SPX is down 16 percent.

In an interview, Conant said that when he took over, Campbell was "the poorest performing food company of the 19 largest food companies in the world."

"I was hired to renew the company and rebuild it. And ten years later I can look back and say I've done my job," he said. "It's a good time to move on."

Conant suffered broken ribs in a car accident in July 2009. He had surgery and continued to lead the company.

He said he will focus on the upcoming soup season and making a smooth transition. He declined to specify his future plans, and only said: "I'm finished being a CEO, but I'll never retire."

Under Conant, Campbell sold the Godiva chocolate business and focused more on soup, drinks and sauces and baked goods.

Despite new marketing and healthier soup reformulations, analysts have said Campbell was slow to stabilize declines in its iconic red-and-white labeled condensed soups, as consumers opted for the convenience of ready-to-eat soups before the recession hit.

Conant said Morrison -- whom he has known for some 15 years, having recruited her to Nabisco and to Campbell -- is "the perfect candidate" for the top job.

"If I was to describe Denise in a nutshell, I'd say she's tough-minded on standards of performance and tender-hearted with people," he said. "It's a real unique blend."

COMPANY AT A CROSSROADS

Given the recent poor performance of soup, Morrison is a surprising choice for CEO, said Janney Montgomery Scott analyst Jonathan Feeney. He also cited the operational difficulties of replacing a manager on the brink of the busiest season.

"Perhaps maintaining current operational leadership was the prudent choice," Feeney said in a research note. However, he said the timing could indicate a greater sense of urgency.

Ken Harris, chief executive of consulting firm Kantar Retail Americas, said the big question now was what Campbell will look like "in the next generation".

Campbell, based in Camden, New Jersey, was weighing a bid for Britain's United Biscuits, a source familiar with the situation told Reuters last month. [ID:nN23201437]

"They are at an inflection point," said Harris, whose firm works with food makers and sellers. He said there may be opportunities for Campbell to buy another firm or be bought.

"There's a lot of M&A activity right now. They're well-positioned," Harris said. "For them, sitting on the sidelines is not a good option." (Additional reporting by Brad Dorfman in Chicago and Lisa Baertlein in Los Angeles; Editing by Steve Orlofsky, Bernard Orr)

A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

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