Campbell’s (NASDAQ:CPB) reported fourth-quarter fiscal 2026 results marked by continued weakness in its snacks business, elevated inflation and lower profitability, while its meals and beverages segment delivered sales growth. Management also outlined a fiscal 2027 plan centered on cost reductions, selective pricing, focused marketing investment and debt reduction.
President and Chief Executive Officer Mick Beekhuizen said organic net sales declined 1% in the fourth quarter, as gains in meals and beverages were more than offset by weaker snacks sales. Adjusted EBIT fell 25%, while adjusted earnings per share declined 37% to $0.39. The company said the year-over-year declines included an estimated high-single-digit impact from lapping an extra week in the prior-year fourth quarter.
Meals and Beverages Growth Offsets Some Snack Weakness
Organic net sales in the meals and beverages division rose 3% during the quarter, supported by 0.8% U.S. retail consumption growth and an approximately $30 million benefit from timing shifts related to the prior-year Sovos SAP implementation. Segment operating earnings declined 12%, however, primarily because of inflation.
Beekhuizen said semi-scratch cooking consumption increased 5%, led by Swanson, Pacific and Rao’s. U.S. soup consumption rose 0.9%, with the broth category up 11.8%. Swanson grew 7%, while Pacific increased 28.4%.
Premium soup brands continued to post strong growth. Pacific and Rao’s eating soups grew 14% and 25.3%, respectively, while declines moderated for Campbell’s Chunky and Red and White Condensed soups.
Rao’s consumption rose 9.6% in the quarter and 11.3% for the full fiscal year. Rao’s sauce consumption increased 8.9% in the fourth quarter, aided by distribution, velocity growth, increased marketing and new creamy red sauces. Household penetration reached 18.9%, up 170 basis points for the year, according to the company.
For fiscal 2027, Campbell’s plans new products including Pacific Ramen Broth, Campbell’s Condensed Sauces and a line of Campbell’s ready-to-serve soups made with bone broth. The new soup line is expected to offer 20 grams of protein and an average of eight grams of fiber, management said.
Snacks Division Remains Under Pressure
Snacks organic net sales declined 6% in the fourth quarter, while consumption fell 5.1%. Segment operating earnings dropped 34%, driven by inflation and volume deleverage. Campbell’s cited lower U.S. retail consumption and reduced contract and partner sales.
Goldfish consumption declined 1.1%, though Beekhuizen said core consumption returned to growth following a strategy shift toward family snacking. The company pointed to double-digit e-commerce growth and its collaboration with The Pokémon Company as supportive factors.
Campbell’s plans to support Goldfish with back-to-school activity, a new advertising campaign, refreshed packaging and new protein, whole grain and gluten-free varieties. The packaging will emphasize attributes such as no artificial colors or preservatives, real cheese and baked, rather than fried, products.
Pepperidge Farm Fresh Bakery consumption declined 4.4%, an improvement from the third quarter. Pepperidge Farm cookies fell 4.7%, with mixed performance across the portfolio. Management said the company will emphasize in-store execution, availability, innovation and a national media campaign for Pepperidge Farm cookies.
Salty snacks retail sales declined 7.8%, including a 5.4% decrease in pretzels and a 9.4% decline in chips. Cape Cod and Kettle Brand were among the brands facing pressure in what Beekhuizen described as a highly competitive chips category.
The company said its snacks turnaround will focus on core products, improved service and shelf availability, tighter assortments, lower costs and more disciplined price-pack architecture and trade spending. Beekhuizen cautioned that the turnaround would take time and may not progress in a straight line.
Cost Savings, Dividend Reset and Balance Sheet Actions
Chief Financial Officer Todd Cunfer said fourth-quarter adjusted gross margin declined 190 basis points to 28.6%. Inflation of nearly 6% and other supply-chain expenses partly offset productivity gains. Fiscal 2026 operating cash flow was $1 billion, down nearly $100 million from the prior year because of lower cash earnings.
At fiscal year-end, Campbell’s held approximately $394 million in cash and cash equivalents and about $7.1 billion in debt, producing a net leverage ratio of 4.3 times.
The company is launching an enterprise-wide savings program targeting $500 million in cost reductions by fiscal 2030, separate from ongoing annual productivity efforts that target approximately 3% of cost of products sold. Actions already underway include the planned closure of snacks plants in Hyannis and Jeffersonville and workforce reductions.
Through voluntary early retirements and involuntary reductions, Campbell’s reduced its salaried workforce by approximately 13%, Cunfer said.
The company also reset its quarterly dividend to $0.25 per share, or $1 annually, representing a 36% reduction. Campbell’s expects the move to reduce annual cash outflows by approximately $170 million, with the savings directed toward debt reduction. Management said it aims to reduce leverage to approximately three times while maintaining its investment-grade credit rating.
Fiscal 2027 Outlook Calls for Further Declines
Campbell’s forecast fiscal 2027 net sales and organic net sales declines of 2% to 4%. It expects adjusted EBIT to decline 7% to 12% and adjusted EPS to range from $1.65 to $1.80, representing a decline of 17% to 24%.
The outlook assumes raw-material and packaging inflation of 5% to 6%, double-digit logistics inflation, productivity above 4% and low-single-digit net pricing benefits for the full year. It also includes more than $100 million of cost reductions from the new savings program.
Management expects the first quarter to be weaker than the full-year outlook, citing snacks softness, investments behind meals and beverages innovation and holiday programs, and elevated inflation. Campbell’s expects first-quarter adjusted EBIT margins of about 10%, followed by improving year-over-year trends as productivity, savings and pricing actions build through the year.
About Campbell’s (NASDAQ:CPB)
Campbell’s (NASDAQ: CPB) is a leading manufacturer of shelf-stable foods and beverages, best known for its iconic soups and broths. Headquartered in Camden, New Jersey, the company offers a diverse portfolio of products designed to meet consumer demand for convenient, affordable meals and snacks. Since its founding in 1869, Campbell’s has grown through a combination of organic innovation and strategic acquisitions to expand its presence in the food industry.
The company’s brand portfolio includes Campbell’s Condensed Soups, V8 juices, Prego pasta sauces, Swanson broths and stocks, Pace salsas and dips, and Pepperidge Farm baked snacks.
