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    CPB
    Earnings call· Feb 2026(Q2 FY26)

    CAMPBELL'S Q2 FY26 earnings call CPB

    Mar 11, 2026 Source

    Executive summary

    The Campbell's Company Q2 FY26 — Snacks Underperformance and Guidance Revision

    The Campbell's Company reported Q2 FY26 results below expectations, primarily driven by underperformance in the Snacks division and storm-related shipment delays impacting Meals & Beverages. Despite strong underlying demand in Meals & Beverages, particularly for the Rao's brand, the company revised its full-year guidance downwards. Management is implementing aggressive cost-saving measures and focusing on improving execution in Snacks to stabilize performance and drive sustainable growth.

    Highlights

    4

    • Meals & Beverages in-market demand grew 2% in Q2, driven by leadership brands.

    • Rao's brand surpassed $1 billion in net sales on a trailing 12-month basis, growing 14.5% in consumption during the quarter.

    • Goldfish showed sequential improvement in consumption, contributing to pockets of strength in Snacks.

    • The company generated strong cash, returning $263 million to shareholders year-to-date through dividends and share repurchases.

    Concerns

    5

    • Organic net sales declined 3% in Q2, reflecting lower-than-anticipated in-market consumption.

    • Adjusted EBIT declined 24% in Q2, primarily due to lower sales and operational disruptions.

    • Adjusted EPS was $0.51, down 31% versus prior year, impacted by lower operating performance.

    • Snacks performance was weaker than expected, with organic net sales declining 6% due to volume and mix pressure.

    • Full-year FY26 guidance was revised downwards, with adjusted EPS now expected between $2.15 and $2.25.

    Guidance & targets

    7
    CategoryTargetConfidence
    Full-year FY26 Organic Net Sales
    down 2% to down 1%
    high materiality
    High
    Full-year FY26 Adjusted EBIT
    down 20% to down 17%
    high materiality
    High
    Full-year FY26 Adjusted EPS
    $2.15 to $2.25
    high materiality
    High
    Q3 FY26 Organic Net Sales, EBIT, and EPS Growth Profile
    relatively consistent with Q2
    medium materiality
    High
    Total CapEx
    approximately 3.7% of net sales
    medium materiality
    High
    Cost Savings Target
    $375 million
    high materiality
    High
    Additional Near-Term Overhead Reductions
    $100 million
    medium materiality
    High

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    Meals & Beverages
    Organic net sales declined 2%, driven by volume and mix declines of 2%, partially offset by favorable net price realization of almost 1%. Results were impacted by an estimated $20 million due to customer shipment delays caused by January's winter storm, as well as competitive pressures and tariff impacts. Operating margin declined due to inflationary and volume-related challenges.
    Underlying U.S. retail consumption: grewRao's consumption: 14.5% growthRao's TTM net sales: >$1 billionU.S. soup consumption: flatPacific consumption: strong double-digit dollar and volume growthPrego: #2 share position across 8 U.S. SCANA regions
    		decreased modestly-2%—15.3%
    Snacks
    Net sales, both reported and organic, declined 6%, primarily due to volume and mix pressure, while net price realization was flat. Declines in chips and pretzels, supply constraints in fresh bakery, and impacts from third-party partner and contract brands were significant drags. Operating margin decline was 25% driven by poor bakery network performance and the rest by volume deleverage and investment in marketing and SG&A.
    Goldfish: sequential improvement in consumptionCookies: share gainsPepperidge Farm fresh bakery: negatively impacted by execution challengesPretzels: sequential improvementChips: competitive headwinds
    		declined 6%-6%—declined 390 basis points

    Operational metrics

    18
    Organic net sales
    -3%
    Q2 FY26

    Reflecting lower-than-anticipated in-market consumption within Snacks and shipment delays in Meals & Beverages.

    Adjusted EBIT
    -24%YoY
    Q2 FY26

    Primarily driven by lower sales, operational disruptions, and tariff-related cost pressure.

    Adjusted EPS
    $0.51down 31% versus prior year
    Q2 FY26

    Decrease almost entirely attributable to lower adjusted EBIT, including an approximate $0.04 from January storm-related impacts.

    Adjusted gross profit margin
    27.7%decreased 270 basis points
    Q2 FY26

    Net price realization was slightly favorable, though less so than in the prior quarter due to additional promotional activity.

    Cost savings
    $20 million
    Q2 FY26

    Part of the fiscal 2028 cost savings target, helping to partially offset tariff headwinds.

    Overhead reductions
    $100 million
    next couple of years

    Additional near-term initiatives to increase efficiency and effectiveness across the organization.

    Adjusted EBIT margin
    11%declined from 13.9%
    Q2 FY26

    Reflecting the lower adjusted gross profit.

    Shareholder returns
    $263 millionyear-over-year
    YTD FY26

    Despite near-term earnings pressure, the company continued strong stable cash generation.

    Capital expenditures
    $227 million
    YTD FY26

    Focused on growth and productivity.

    Net debt to adjusted EBITDA
    3.8x
    end of Q2 FY26

    Reflecting lower earnings; reducing debt remains a key focus.

    Cash and cash equivalents
    $561 million
    end of Q2 FY26

    Balance at the end of the second quarter.

    Revolving credit facility available
    $1.8 billion
    end of Q2 FY26

    Available capacity under the facility.

    Customer shipment delays impact
    $14 million
    Q2 FY26

    Related to the January storm, impacting EBIT and EPS.

    Tariff impact
    230 bps
    Q2 FY26

    Gross tariff impact on gross profit margin.

    In-market consumption
    flatimproved sequentially from down 1% in Q1
    Q2 FY26

    Driven by Meals & Beverages, despite overall pressures.

    Dollar consumption (leadership brands)
    flat
    Q2 FY26

    Across leadership brands, with dollar share declining 0.2 points.

    Snacks operating margin decline
    390 bps
    Q2 FY26

    Reflecting volume deleverage and higher costs in the Snacks segment.

    Share buyback
    suspended
    Q2 FY26

    Suspended all share repurchases, including those for antidilution purposes, to focus on debt reduction.

    Industry KPIs

    7
    MetricValueDetails
    Gross margin27.7%%
    Brand platform growthRao's brand surpassed $1 billionUSD
    Organic net revenue growth-3%%
    Adjusted EPS operating income$0.51USD
    Volume mix vs pricing decompositionvolume and mix as the primary headwinds
    Elasticity consumer response commentaryvalue-conscious consumer
    Category growth benchmark channel shift databroad category consumption grew for the 10th consecutive quarter

    Product announcements

    1
    ProductTypeDetails
    Campbell's condensed sauceslaunch

    Risks & headwinds

    9
    Weaker-than-expected Snacks performanceQ2 FY26, ongoing

    Organic net sales down 6% in Q2, recovery taking longer than anticipated.

    Mitigation: Focused actions on Goldfish momentum, restoring fresh bakery service, sharpening value and innovation in salty snacks.

    Storm-related shipment delaysQ2 FY26

    $20 million impact on Meals & Beverages, $14 million EBIT impact, $0.04 EPS impact in Q2.

    Mitigation: Volume shifted from Q2 into Q3.

    Elevated competitive intensity in salty snacksQ2 FY26, ongoing

    Weighed on volume and margins.

    Mitigation: Sharpen value, focus on in-market execution, new product launches.

    Fresh bakery execution disruptionsQ2 FY26, expected full recovery by Q4 FY26

    Negatively impacted Pepperidge Farm fresh bakery, exacerbated by January winter storm.

    Mitigation: Cross-functional team deployed, investing for sustainable improvements, progress expected in Q3.

    Inflation and other supply chain costsQ2 FY26, ongoing

    Primary drivers of 270 bps gross profit margin decrease.

    Mitigation: Cost savings, supply chain productivity improvements, favorable net price realization.

    Tariff-related cost pressureQ2 FY26, H2 FY26

    Approximately 230 bps gross tariff impact on gross profit in Q2; modest increase to H2 FY26 tariff headwind from new 10% global tariff.

    Mitigation: Aggressive cost savings initiatives.

    Value-conscious consumerQ2 FY26, ongoing

    Indicating a more value-conscious consumer and elevated competitive intensity, impacting volume and mix.

    Mitigation: Sharpening value architecture, focusing on compelling value propositions.

    Increased net debt to adjusted EBITDA leverage ratioQ2 FY26, ongoing focus

    3.8x at end of Q2, reflecting lower earnings.

    Mitigation: Minimizing working capital and CapEx needs, suspended all share repurchases.

    Potential impact regarding the Iran conflict

    Not reflected in updated guidance.

    What to watch in Q3 FY26

    5

    Snacks business recovery

    Q3 FY26
    CurrentOrganic net sales down 6% in Q2 FY26
    TargetImproved performance, sequential improvement in operating margin

    Why it matters

    Snacks underperformance was a primary driver of Q2 misses and the full-year guidance revision.

    We forecast net sales performance for Snacks to improve modestly in the second half versus Q2, with sequential improvement in operating margin as well.

    2 min read6 chapters

    Detailed Narrative

    01

    Q2 Performance Overview

    The company's Q2 FY26 performance was below expectations, with underlying consumer demand remaining steady but reported results pressured by weaker-than-expected Snacks performance and storm-related shipment delays in Meals & Beverages. Organic net sales declined 3%, adjusted EBIT declined 24%, and adjusted EPS was $0.51, down 31% year-over-year. These results underscore ongoing pressures and reinforce the focus on execution and disciplined actions.

    02

    Meals & Beverages Segment Strength

    In-market demand for Meals & Beverages grew 2% in Q2, driven by leadership brands like Rao's, which surpassed $1 billion in net sales on a trailing 12-month basis, growing 14.5% in consumption. The segment held or grew share in key categories, benefiting from sustained at-home cooking trends, consumer trust, and compelling value propositions. Organic net sales for the segment declined 2%, primarily due to a 1-point headwind from January storm-related shipment delays.

    03

    Snacks Segment Underperformance and Recovery Efforts

    The Snacks division's performance was weaker than anticipated, with organic net sales declining 6% due to volume and mix pressure, and net price realization being flat. Challenges in fresh bakery execution and increased competitive intensity in salty snacks weighed on results. The company is focusing on maintaining Goldfish momentum, improving fresh bakery service, and sharpening value in salty snacks through innovation and in-market execution.

    04

    Cost Savings and Margin Focus

    To support margins and reinvestment, the company is accelerating enterprise cost savings. This includes $100 million of additional near-term overhead reductions over the next couple of years, with two-thirds outside the current enterprise cost savings program. These efforts aim to mitigate inflationary and tariff-related cost pressures, which contributed to a 270 basis point decrease in adjusted gross profit margin to 27.7%.

    05

    Full-Year Guidance Revision

    Due to the slower-than-anticipated recovery in Snacks and incremental trade investments, the full-year FY26 guidance was revised downwards. Organic net sales are now expected to decline 2% to 1%, adjusted EBIT to decline 20% to 17%, and adjusted EPS to be in the range of $2.15 to $2.25. The updated guidance also reflects a modest increase in the second-half tariff headwind🌐 from a newly imposed 10% global tariff.

    06

    Capital Allocation and Debt Management

    The company continued strong cash generation, returning $263 million to shareholders year-to-date through dividends and share repurchases. However, share repurchases have been suspended. The net debt to adjusted EBITDA leverage ratio increased to 3.8x at the end of Q2, reflecting lower earnings. Reducing debt remains a key focus, with emphasis on minimizing working capital and CapEx needs.

    AI-generated summary of the company’s earnings call. Not investment advice.