Recently released earnings from Campbell Soup Company (NYSE: CPB) are a mixed bag. Sales of the company's signature product, soup in whatever form, are down. Sales are not down by a lot, but down nevertheless. Overall, total sales increased 7% to $2.3 billion, but almost half of that increase was due to currency exchange, not organic growth. EPS increased 6% to $0.70, but some of that gain was due to a $78 million stock repurchase that reduced the number of shares outstanding by 2 million. In many divisions, costs rose more quickly than prices, thereby depressing gross margins. Overall, cost of sales increased as well. Higher advertising and promotional expenses, coupled with a $104 million increase in net debt, caused a decrease in cash flow from operations. CEO Douglas Conant is optimistic that the current winter quarter, always a good season for soup sales, will deliver better numbers.

Soup sale declines were counteracted by increases in sales of Swanson broth, various types of V-8 juices and Prego pasta sauces. US baking and snacking sales increased 10% to $532 million, half the soup division revenue. Increased snack sales were led by the humble Goldfish cracker and other Pepperidge Farms baked goods.

Worldwide sales of Godiva Chocolate increased at least 10%. So why is Campbell looking to offload the brand? Campbell soups are now beginning to be available in Russia and China. The company hopes to see incremental additions to the bottom line from those two markets shortly. The company is sticking with its FY 2008 guidance of 3-4% sales growth rate and 5-7% EPS growth rate, acceptable numbers as long as the major driver of growth is organic and not currency exchange.