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Campbell's Q4 Earnings Miss Estimates as Inflation Pressures Margins
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Key Takeaways
Campbell's Q4 EPS fell 37% to 39 cents as sales declined 8%, and both missed estimates.
Snacks organic sales fell 6%, while Meals & Beverages organic sales rose 3% on favorable volume/mix.
Campbell's targets $500 million in cost cuts by fiscal 2030 as inflation and logistics costs stay elevated.
The Campbell's Company (CPB - Free Report) closed fiscal 2026 with continued operating pressure as elevated inflation and Snacks’ weakness outweighed momentum in Meals & Beverages.
Adjusted earnings for the fiscal fourth quarter were 39 cents per share, down 37% year over year and lagging the Zacks Consensus Estimate of 40 cents. Net sales declined 8% to $2,137 million and missed the consensus mark of $2,152 million. Organic sales fell 1%, primarily due to lower volume/mix.
The Campbell's Company Price, Consensus and EPS Surprise
Adjusted gross profit declined 14% to $611 million. Adjusted gross margin contracted 190 basis points to 28.6%, mainly due to cost inflation and other supply-chain costs, including tariffs. Supply-chain productivity improvements partially offset these pressures.
Adjusted marketing and selling expenses decreased 6% to $186 million, while adjusted administrative expenses fell 3% to $153 million. Adjusted EBIT declined 25% to $242 million, with adjusted EBIT margin falling to 11.3% from 13.8% a year earlier. The additional week in the prior-year quarter had an estimated 8% impact on adjusted EBIT.
Meals & Beverages net sales decreased 4% to $1,187 million, while organic net sales increased 3% on 3% favorable volume/mix. Organic growth included an estimated two-point benefit tied to the prior-year Sovos Brands ERP implementation. Segment operating earnings declined 12% to $181 million, primarily due to inflation and other supply-chain costs.
Snacks’ net sales fell 12% to $950 million, with organic net sales declining 6% as an unfavorable volume/mix of 6% outweighed a 1% favorable net price realization. Segment operating earnings dropped 34% to $101 million. Salty snacks retail sales declined 7.8%, while core Goldfish consumption returned to growth. Rao's remained a bright spot in Meals & Beverages, with total consumption up 9.6% in the quarter.
CPB Expands Cost-Savings and Pricing Actions
Campbell's is launching an enterprise-wide program targeting $500 million in cost reductions by fiscal 2030. The company generated about $25 million in savings during the fiscal fourth quarter, bringing cumulative savings under its prior program to approximately $225 million.
Several measures are already underway, including plant closures and workforce reductions that lowered the salaried workforce by approximately 13%. For fiscal 2027, management expects more than $100 million in savings and productivity above 4% of the cost of products sold. CPB also plans targeted pricing actions to help offset persistent input-cost pressure.
Campbell's Cash Flow and Balance Sheet Stay in Focus
Fiscal 2026 operating cash flow totaled $1,039 million compared with $1,131 million in the prior year. Capital expenditures were $361 million, while the company returned $496 million to its shareholders, primarily through dividends.
Campbell's ended fiscal 2026 with $394 million in cash and cash equivalents. Short-term borrowings were $977 million and long-term debt totaled $6,160 million. Net leverage reached 4.3 times. To accelerate debt reduction, the board reduced the quarterly dividend to 25 cents per share from 39 cents, which is expected to lower annual cash outflows by approximately $170 million.
CPB's FY27 Outlook Reflects Cost Challenges
For fiscal 2027, Campbell's expects net sales and organic net sales to decline 2-4%. Adjusted EBIT is projected to decrease 7-12%, while adjusted earnings are expected in the range of $1.65-$1.80 per share, representing a decline of 17-24%. The La Regina acquisition is expected to contribute modestly to sales and be broadly neutral to adjusted earnings.
The outlook assumes raw-material and packaging inflation of 5-6%, double-digit logistics inflation and a low-single-digit benefit from net pricing. Total operating expenses are expected to decline slightly on a dollar basis, including an approximately $50 million impact from resetting incentive compensation levels
Campbell's Expects a More Pressured Start to FY27
Management expects first-quarter fiscal 2027 organic net sales and profit declines to fall below the lower end of the full-year ranges, reflecting continued Snacks weakness and heavier investment behind innovation and holiday activity in Meals & Beverages. Fiscal first-quarter adjusted EBIT margin is projected at approximately 10%.
Performance is expected to improve after the first quarter as productivity, savings and pricing contributions build through the year. Adjusted net interest expense is projected at $345-$350 million, while capital expenditures are expected to be approximately $300 million.
Shares of the Zacks Rank #4 (Sell) company have tumbled 27.2% over the past year compared with the industry’s decline of 16.3%.
Stocks to Consider
The Chefs' Warehouse, Inc. (CHEF - Free Report) is a distributor of specialty food and center-of-the-plate products across the United States, Canada and the Middle East. CHEF currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for The Chefs' Warehouse’s current fiscal-year sales and earnings per share (EPS) implies growth of 10.6% and 33.7%, respectively, from the year-ago figures. CHEF delivered a trailing four-quarter earnings surprise of 30.4%, on average.
The Vita Coco Company, Inc. (COCO - Free Report) , a leading beverage company that develops, markets and distributes coconut water and other plant-based beverages, currently sports a Zacks Rank #1. COCO delivered a trailing four-quarter earnings surprise of 21.9%, on average.
The Zacks Consensus Estimate for The Vita Coco Company’s current fiscal-year sales and EPS calls for growth of 31.6% and 64.7%, respectively, from the year-ago figures.
Darling Ingredients Inc. (DAR - Free Report) , a global developer and producer of sustainable natural ingredients derived from edible and inedible bio-nutrients, currently carries a Zacks Rank of 2 (Buy).
The Zacks Consensus Estimate for Darling’s current fiscal-year sales suggests an 11.5% jump from the prior-year levels. The consensus estimate for current fiscal-year EPS stands at $6.98, which implies a substantial improvement from the year-ago period. DAR delivered a trailing four-quarter earnings surprise of 38.9%, on average.
View the Zacks #1 Rank List
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Campbell's Q4 Earnings Miss Estimates as Inflation Pressures Margins
Key Takeaways
The Campbell's Company (CPB - Free Report) closed fiscal 2026 with continued operating pressure as elevated inflation and Snacks’ weakness outweighed momentum in Meals & Beverages.
Adjusted earnings for the fiscal fourth quarter were 39 cents per share, down 37% year over year and lagging the Zacks Consensus Estimate of 40 cents. Net sales declined 8% to $2,137 million and missed the consensus mark of $2,152 million. Organic sales fell 1%, primarily due to lower volume/mix.
The Campbell's Company Price, Consensus and EPS Surprise
The Campbell's Company price-consensus-eps-surprise-chart | The Campbell's Company Quote
CPB's Margins Remain Under Pressure
Adjusted gross profit declined 14% to $611 million. Adjusted gross margin contracted 190 basis points to 28.6%, mainly due to cost inflation and other supply-chain costs, including tariffs. Supply-chain productivity improvements partially offset these pressures.
Adjusted marketing and selling expenses decreased 6% to $186 million, while adjusted administrative expenses fell 3% to $153 million. Adjusted EBIT declined 25% to $242 million, with adjusted EBIT margin falling to 11.3% from 13.8% a year earlier. The additional week in the prior-year quarter had an estimated 8% impact on adjusted EBIT.
Campbell's Q4 Segment Performance Shows Mixed Trends
Meals & Beverages net sales decreased 4% to $1,187 million, while organic net sales increased 3% on 3% favorable volume/mix. Organic growth included an estimated two-point benefit tied to the prior-year Sovos Brands ERP implementation. Segment operating earnings declined 12% to $181 million, primarily due to inflation and other supply-chain costs.
Snacks’ net sales fell 12% to $950 million, with organic net sales declining 6% as an unfavorable volume/mix of 6% outweighed a 1% favorable net price realization. Segment operating earnings dropped 34% to $101 million. Salty snacks retail sales declined 7.8%, while core Goldfish consumption returned to growth. Rao's remained a bright spot in Meals & Beverages, with total consumption up 9.6% in the quarter.
CPB Expands Cost-Savings and Pricing Actions
Campbell's is launching an enterprise-wide program targeting $500 million in cost reductions by fiscal 2030. The company generated about $25 million in savings during the fiscal fourth quarter, bringing cumulative savings under its prior program to approximately $225 million.
Several measures are already underway, including plant closures and workforce reductions that lowered the salaried workforce by approximately 13%. For fiscal 2027, management expects more than $100 million in savings and productivity above 4% of the cost of products sold. CPB also plans targeted pricing actions to help offset persistent input-cost pressure.
Campbell's Cash Flow and Balance Sheet Stay in Focus
Fiscal 2026 operating cash flow totaled $1,039 million compared with $1,131 million in the prior year. Capital expenditures were $361 million, while the company returned $496 million to its shareholders, primarily through dividends.
Campbell's ended fiscal 2026 with $394 million in cash and cash equivalents. Short-term borrowings were $977 million and long-term debt totaled $6,160 million. Net leverage reached 4.3 times. To accelerate debt reduction, the board reduced the quarterly dividend to 25 cents per share from 39 cents, which is expected to lower annual cash outflows by approximately $170 million.
CPB's FY27 Outlook Reflects Cost Challenges
For fiscal 2027, Campbell's expects net sales and organic net sales to decline 2-4%. Adjusted EBIT is projected to decrease 7-12%, while adjusted earnings are expected in the range of $1.65-$1.80 per share, representing a decline of 17-24%. The La Regina acquisition is expected to contribute modestly to sales and be broadly neutral to adjusted earnings.
The outlook assumes raw-material and packaging inflation of 5-6%, double-digit logistics inflation and a low-single-digit benefit from net pricing. Total operating expenses are expected to decline slightly on a dollar basis, including an approximately $50 million impact from resetting incentive compensation levels
Campbell's Expects a More Pressured Start to FY27
Management expects first-quarter fiscal 2027 organic net sales and profit declines to fall below the lower end of the full-year ranges, reflecting continued Snacks weakness and heavier investment behind innovation and holiday activity in Meals & Beverages. Fiscal first-quarter adjusted EBIT margin is projected at approximately 10%.
Performance is expected to improve after the first quarter as productivity, savings and pricing contributions build through the year. Adjusted net interest expense is projected at $345-$350 million, while capital expenditures are expected to be approximately $300 million.
Shares of the Zacks Rank #4 (Sell) company have tumbled 27.2% over the past year compared with the industry’s decline of 16.3%.
Stocks to Consider
The Chefs' Warehouse, Inc. (CHEF - Free Report) is a distributor of specialty food and center-of-the-plate products across the United States, Canada and the Middle East. CHEF currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for The Chefs' Warehouse’s current fiscal-year sales and earnings per share (EPS) implies growth of 10.6% and 33.7%, respectively, from the year-ago figures. CHEF delivered a trailing four-quarter earnings surprise of 30.4%, on average.
The Vita Coco Company, Inc. (COCO - Free Report) , a leading beverage company that develops, markets and distributes coconut water and other plant-based beverages, currently sports a Zacks Rank #1. COCO delivered a trailing four-quarter earnings surprise of 21.9%, on average.
The Zacks Consensus Estimate for The Vita Coco Company’s current fiscal-year sales and EPS calls for growth of 31.6% and 64.7%, respectively, from the year-ago figures.
Darling Ingredients Inc. (DAR - Free Report) , a global developer and producer of sustainable natural ingredients derived from edible and inedible bio-nutrients, currently carries a Zacks Rank of 2 (Buy).
The Zacks Consensus Estimate for Darling’s current fiscal-year sales suggests an 11.5% jump from the prior-year levels. The consensus estimate for current fiscal-year EPS stands at $6.98, which implies a substantial improvement from the year-ago period. DAR delivered a trailing four-quarter earnings surprise of 38.9%, on average.