Goldfish crackers
Goldfish crackers showed strong results in the quarter.

CAMDEN, N.J. — Strong results from the company’s Goldfish crackers business helped lift quarterly results for the Global Biscuits and Snacks division at Campbell Soup Co. in the first quarter ended Nov. 1.

Operating profit in the business, which includes Pepperidge Farm, Norwalk, Conn., totaled $114 million, up 16% from the same period in 2014. Sales were $652 million, down 6%. Excluding the effects of currency moves, sales during the quarter were up 2%.

Accounting for the improved profitability were higher gross margins, volume gains and lower selling expenses, partially offset by unfavorable currency moves.

Within Pepperidge, strength derived from strong sales of Goldfish crackers, fresh bakery and frozen products. Cookie sales were down.

Outside the United States, sales gains in Australia were offset by declines in Indonesia.

Asked during a conference call about the Goldfish crackers business, which had experienced struggles in the recent past, Denise Morrison, president and chief executive officer, said considerable effort has been made to generate and sustain growth in the business.

Denise Morrison, Campbell
Denise Morrison, president and c.e.o. of Campbell

“We definitely have been very focused on keeping our Goldfish programming strong,” Ms. Morrison said during a Nov. 24 conference call with analysts. “I think that business is hitting on all cylinders with good advertising, a good promotional program, and the right proposition for millennial parents and their children. So we continue to be pretty excited about our Goldfish business. And I think that mothers still feel like that is a very positive snacking for their children.

“I think we have more work to do on cookies, and we’re working on that as we speak. We do have new leadership right now in the Pepperidge Farm business, and that team is really coming together and focusing on the next wave of innovation ideas.”

Anthony DiSivestro fingered a specific part of the cookie business as struggling.

“Chunk cookies are a particular issue within the Pepperidge Farm portfolio that we’re addressing, but we haven’t made a strategic decision in those businesses to go for price realization and better EBIT in exchange for market share,” he said.

Noting that the Global Biscuits and Snacks division was created early in 2015 by combining the Pepperidge, Arnott’s and Kelsen businesses, Ms. Morrison said the division is charged with expanding in developed and developing markets while widening margins.

Pepperidge Farm Chunk cookies
Pepperidge Farm's Chunk cookies are struggling.

“This division too is off to a promising start in fulfilling its portfolio role, with organic sales growth, improved gross margins and strong earnings,” she said. “I’m especially encouraged by our sales performance in our core markets, the United States and Australia.”

Net income at Campbell Soup in the first quarter was $194 million, equal to 63c per share on the common stock, down 22% from $248 million, or 79c per share, in the first quarter of fiscal 2015. Net sales were $2,203 million, down 2.3% from the first quarter last year.

A new accounting method for the company’s defined benefit pension and postretirement plans, in which gains and losses are being marked to market, lopped 26c per share from the company’s first-quarter earnings.

Earnings before interest and taxes, as reported, were $315 million in the first quarter, versus $389 million in the same period last year.  Adjusted for the pension accounting (costing $128 million) and restructuring charges ($36 million), EBIT was $479 million in the first quarter, up 23%. Similarly, gross margins fell to 34.3% from 35.3%, but actually widened by 2.6 percentage points, adjusted for the special items.