Campbell’s (NASDAQ:CPB) expects fiscal 2027 to begin with pressure on sales, margins and earnings, particularly in its snacks business, before performance improves as pricing, innovation and cost-savings initiatives gain traction later in the year.
During the company’s fourth-quarter fiscal 2026 earnings Q&A session, President and Chief Executive Officer Mick Beekhuizen said organic net sales at the midpoint of Campbell’s outlook are expected to decline about 3% for the full year. Meals & Beverages is expected to be down slightly throughout the year, while snacks is anticipated to reach its low point in the fiscal first quarter and then improve modestly.
First-Quarter Pressure Expected to Be Most Severe
Chief Financial Officer Todd Cunfer said Campbell’s expects inflation of roughly 5% to 6% throughout fiscal 2027, with logistics costs running at around double-digit levels. The logistics effect should ease near the end of the year as the company laps cost inflation embedded in the prior year’s fourth quarter.
The first quarter is expected to include negative price realization, spending on Meals & Beverages innovation, slotting fees, product activation and holiday-related trade activity. Cunfer said these investments will pressure margins early in the year.
Campbell’s expects gross margin to decline significantly in the first quarter, improve in the second quarter and turn positive in the second half. For the full year, gross margin is projected to be down roughly 50 to 100 basis points. Cunfer said adjusted earnings per share are expected to decline sharply in the first quarter, improve sequentially and become positive by the fourth quarter.
Snacks is expected to face a particularly difficult start. Cunfer said snack sales are expected to fall by high single digits in the first quarter, reflecting consumption trends, prior-year shipment timing tied to holiday programming and incremental trade investments. He said the business will remain down for the year, although volume declines are expected to moderate as the year progresses.
Campbell’s is not forecasting positive snack consumption growth by year-end, Cunfer said, but expects “continued modest progress” throughout the year.
Pricing Actions and Cost-Reduction Plan
The company has communicated a price increase affecting about 60% of its portfolio, with an average increase of approximately 4% to 5%. Cunfer said Campbell’s has assumed an elasticity of 1.5 times in its planning, meaning the company expects the associated volume impact to reduce net sales while benefiting profit.
Management characterized retailer discussions surrounding the actions as constructive. Price realization is expected to become positive beginning in the second quarter as pricing implemented near the end of fiscal 2026 moves through the business.
Beekhuizen and Cunfer said pricing is only one component of the company’s response to cost inflation. Campbell’s is also pursuing a $500 million cost-savings program running from fiscal 2027 through fiscal 2030. The program includes $150 million of remaining savings from the company’s prior $375 million program, leaving $350 million of incremental identified savings through fiscal 2030.
The initiatives include recently announced headcount reductions, procurement savings across direct and indirect spending, supply-chain actions and network optimization. Cunfer said procurement savings and headcount actions are expected to produce significant benefits in fiscal 2027 and fiscal 2028, while some supply-chain network changes will take longer to materialize.
- Inflation is expected to run about 5% to 6% through the fiscal year.
- Price increases cover roughly 60% of the portfolio and average 4% to 5%.
- Gross margin is expected to improve sequentially after a weak first quarter.
- Cost savings are expected to become more heavily weighted toward the second half.
Focus on Cooking, Brands and Snack Recovery
Beekhuizen highlighted the company’s cooking-oriented portfolio as a source of strength. Cooking soup, including broth and condensed cooking products, has been performing well, while Campbell’s continues to work on its ready-to-serve, or eating soup, business.
The company has introduced Campbell’s Nourish and protein soup products and plans additional work around its mainstream ready-to-serve portfolio, including Chunky. Beekhuizen said premium soup continues to grow at a double-digit rate.
More than half of Campbell’s retail Meals & Beverages sales are exposed to cooking, management said. That business has grown at a roughly 5% compound annual rate over the past four years, supported by consumers seeking affordable and convenient “semi-scratch” cooking solutions. Beekhuizen defined semi-scratch cooking as meals involving less than 30 minutes of preparation and fewer than five ingredients.
In snacks, management said its recovery plan centers on core consumers, brand support, innovation, revenue growth management and better execution. The company cited encouraging fourth-quarter trends at Goldfish and plans product launches including Goldfish gluten-free and other “better for you” offerings. Campbell’s also plans national campaigns for Goldfish and Pepperidge Farm.
Beekhuizen said the company is also seeing encouraging performance in unflavored pretzels and cited innovation in cookies, including Milano White Chocolate and Chessmen. However, he said the chips business will take longer to improve despite proactive efforts to strengthen its competitive position.
Capital Allocation and Financing
Campbell’s also discussed its dividend reset, which management described as a difficult but necessary decision intended to support long-term shareholder value. Beekhuizen said the company had constructive discussions with its board regarding the decision.
Cunfer said interest expense is projected to increase by approximately $25 million year over year in fiscal 2027. The increase reflects debt and interest expense associated with the La Regina acquisition, including Campbell’s first cash payment of approximately $140 million, as well as the anticipated refinancing of a $500 million bond due in March.
The company is considering a hybrid security as part of that refinancing. Cunfer said such an issuance could carry a higher coupon but would receive 50% equity credit.
Management identified second-half inflation and the pace of the snacks recovery as the two main variables that could influence where Campbell’s falls within its fiscal 2027 adjusted EPS outlook of $1.65 to $1.80.
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.
