Campbell Soup Co posted lower-than-expected quarterly sales and forecast sales growth for the new fiscal year below its long-term target as the world's largest soup company grapples with a weak economy.

Campbell shares fell 3.2 percent following the report on Friday, even though it posted higher-than-expected quarterly earnings, helped by cost cuts and sales of V8 juice drinks.

Campbell has been battling lower-priced private-label soup competitors and companies that make other simple meals like frozen foods. It had tried to counter that pressure with promotional spending and new products.

It has also reduced sodium in its soups and overhauled its Chunky soup line, but analysts say the soup category, where General Mills Inc's Progresso brand competes, remains difficult.

They keep trying different things, Edward Jones analyst Jack Russo said. Nothing seems to be sticking so far.

For the coming fall and winter soup season, Campbell is overhauling its condensed soup business with more healthy offerings and redesigned labels.

It forecast a sales increase of 2 percent to 3 percent for the fiscal year that began August 2, below its long-term target of 3 percent to 4 percent. That would put 2011 sales at $7.84 billion to $7.92 billion. Analysts' average forecast is $7.91 billion.

The company said at a July meeting with analysts that it expected revenue growth this year to be fueled by higher sales volumes rather than price increases. Campbell is also open to partnerships and acquisitions, executives said at that meeting.

Campbell is weighing a bid for Britain's United Biscuits, a source familiar with the situation told Reuters in August.

Maybe a move like that would help them diversify against the (soup) category a bit (more), Russo said.

Campbell's U.S. soup sales fell 5 percent during its fiscal fourth quarter, ended August 1. U.S. sales of beverages like V8 rose 12 percent, and sales of snacks and baked goods like Pepperidge Farm cookies and crackers rose 3 percent.

Net income increased to $113 million, or 33 cents per share, from $69 million, or 20 cents per share, a year earlier. Analysts on average were expecting 30 cents per share, according to Thomson Reuters I/B/E/S.

Sales slipped 1 percent to $1.52 billion, below analysts' average estimate of $1.59 billion. The fourth quarter tends to be a lower sales month for Campbell, as fewer people eat soup during the summer.

The company said earnings per share for the year would rise within its long-term target of 5 percent to 7 percent, which would mean earnings of $2.59 to $2.64 per share. Analysts on average forecast $2.64.

Campbell shares fell $1.18 to $36.14 in morning trade on the New York Stock Exchange.

(Reporting by Brad Dorfman; Editing by Derek Caney and John Wallace)

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