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CAMPBELL'S (CPB) Q2 FY26 earnings call: guidance

Earnings call· Feb 2026 (Q2 FY26)· Consumer Staples· Mar 11, 2026

Source: earnings call transcript

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

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

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

Product announcements

ProductTypeDetails
Campbell's condensed sauceslaunch

Risks & headwinds

Weaker-than-expected Snacks performance Q2 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 delays Q2 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 snacks Q2 FY26, ongoing

Weighed on volume and margins.

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

Fresh bakery execution disruptions Q2 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 costs Q2 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 pressure Q2 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 consumer Q2 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 ratio Q2 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

Snacks business recovery

Q3 FY26
Current Organic net sales down 6% in Q2 FY26
Target Improved 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.

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Detailed narrative

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.

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.

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.

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%.

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.

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.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.