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CPB
Earnings call · Jul 2026 (Q4 FY26)

CAMPBELL'S Q4 FY26 earnings call CPB

Sep 3, 2026 Source

Executive summary

The Campbell's Company Q4 FY26 — Strategic Reset Amidst Volatility

The Campbell's Company reported a challenging Q4 FY26 with declining sales and profitability, primarily due to Snacks weakness and elevated inflation. The company is implementing a strategic reset, including a new $500 million cost savings program, targeted pricing actions, and a dividend reduction to strengthen the balance sheet and fund investments. While Q1 FY27 is expected to be difficult, management anticipates sequential improvement throughout the year, aiming for long-term sustainable growth and margin recovery.

Highlights

5

  • Meals & Beverages organic net sales grew 3%, driven by 0.8% U.S. retail consumption growth.

  • Rao's consumption increased 9.6% in Q4 and 11.3% for the year, with household penetration reaching 18.9% (up 170 bps YoY).

  • Goldfish core consumption returned to growth, supported by double-digit e-commerce growth.

  • A new $500 million enterprise-wide savings program was launched, targeting cost reductions by FY2030.

  • Operating cash flow for FY26 was $1 billion.

Concerns

5

  • Organic net sales declined 1% in Q4 FY26, primarily due to weakness in Snacks.

  • Adjusted EBIT decreased 25% and adjusted EPS was $0.39 (down 37%) in Q4 FY26, pressured by elevated inflation.

  • The fiscal 2027 outlook projects organic net sales to decline 2-4%, adjusted EBIT to decline 7-12%, and adjusted EPS to decline 17-24%.

  • Q1 FY27 is expected to be very challenging for Snacks, with high single-digit declines and significant margin pressure.

  • The quarterly dividend was reset to $0.25 per share (annualized $1), a 36% reduction.

Guidance & targets

CategoryTargetConfidence
Organic Net Sales
decline 2% to 4%
high materiality
High
Adjusted EBIT
decline 7% to 12%
high materiality
High
Adjusted EPS
$1.65 to $1.80
high materiality
High
Raw Material and Packaging Inflation
5% to 6%
medium materiality
High
Logistics Inflation
double-digit
medium materiality
High
Productivity
above 4%
medium materiality
High
Total Operating Expenses
down slightly on a dollar basis
medium materiality
High
Marketing and Selling Expenses
increase as a percentage of net sales
medium materiality
High
Cost Reductions (Enterprise-wide program)
more than $100 million
high materiality
High
Interest Expense
$345 million to $350 million
medium materiality
High
Earnings Attributable to Noncontrolling Interest
$15 million to $20 million
low materiality
High
Diluted Share Count
approximately 308 million
medium materiality
High
La Regina Adjusted EPS Impact
broadly neutral
low materiality
High
Adjusted EBIT Margins
approximately 10%
high materiality
High
Gross Margin
down 50 to 100 basis points
high materiality
High
Gross Margin
down significantly
high materiality
High
Gross Margin
positive
high materiality
High
Adjusted EPS
positive
high materiality
High
Net Pricing
low single-digit benefit
medium materiality
High
Inflation Coverage
about 80% covered
medium materiality
High
Inflation Coverage
about 50% covered
medium materiality
High
Net Leverage Ratio
approximately 3x
high materiality
High

Segment performance

SegmentRevenueYoYQoQMargin
Meals & Beverages
Strong top-line performance driven by U.S. retail consumption and a timing benefit. Semi-scratch cooking is a key growth pillar. Premium brands like Pacific and Rao's are driving category relevance. Segment operating earnings declined due to inflation.
U.S. retail consumption growth: 0.8%Semi-scratch cooking consumption growth: 5%U.S. Soup consumption growth: 0.9%Broth category growth: 11.8%Swanson growth: 7%Pacific growth: 28.4%Pacific premium brand growth: 14%Rao's premium brand growth: 25.3%Rao's consumption growth: 9.6% (Q4), 11.3% (FY26)Rao's sauce consumption growth: 8.9% (Q4), 9.4% (FY26)Rao's household penetration: 18.9% (up 170 bps YoY)Rao's non-sauce growth: 17.7% (FY26)
—3%—declined 12%
Snacks
Weak performance reflecting softer U.S. retail consumption trends and lower contract/partner sales. Segment operating earnings declined significantly due to inflation and volume deleverage. Goldfish showing encouraging progress, Fresh Bakery improving, but Salty Snacks remain challenging.
Consumption decline: 5.1%Goldfish core consumption: returned to growthPepperidge Farm Fresh Bakery consumption decline: 4.4%Pepperidge Farm cookies consumption decline: 4.7%Salty Snacks retail sales decline: 7.8%Pretzels decline: 5.4%Chips decline: 9.4%
—-6%—declined 34%

Product announcements

ProductTypeDetails
Pacific Ramen Brothlaunch
Campbell's condensed sauceslaunch
Better-for-you clean label Campbell's ready-to-serve soupslaunch
Goldfish gluten-freelaunch
Goldfish protein, whole grainlaunch
Pepperidge Farm cookiesupdate
Snyder's innovationlaunch

Deals & partnerships

La Regina Acquisition of 49% interest, with option to acquire remaining interest at a future date.

First quarter following the acquisition of a 49% interest in La Regina. Deferred payment for the second tranche due May 4, 2027.

Capital programs

Enterprise-wide savings program underway $500 million
Period spend: more than $100 million
Start: Fiscal 2027

Benefit:cost reductions, improved speed and accountability, improved margins and cash flow

Includes remaining initiatives from prior program, overhead savings, procurement savings, and supply chain network optimization.

Snacks plant closures completed

Benefit:improved speed and accountability, improved margins and cash flow, positive impact on fixed cost absorption

Closure of 2 Snacks plants in Hyannis and Jeffersonville.

Risks & headwinds

Elevated inflation Q4 FY26, FY27, particularly in the first half

nearly 6% (Q4 FY26), 5% to 6% (FY27 raw material & packaging), double-digit (FY27 logistics)

Mitigation:Productivity, cost savings initiatives, and pricing actions; new $500M enterprise-wide savings program.

Weakness in Snacks division Q4 FY26, Q1 FY27, expected to improve throughout FY27 but not reach positive consumption

Organic net sales declined 6% (Q4 FY26), high single digits down (Q1 FY27)

Mitigation:New leadership, streamlined operating model, focus on core fundamentals, cost reduction, RGM capabilities, improved execution, innovation (Goldfish, Snyder's), significant media campaigns.

Volume pressure from pricing actions Near term, beginning in Q2 FY27

Negative impact on net sales due to volume impact

Mitigation:Necessary decisions to protect margins and preserve ability to invest in brands; targeted price investments in other areas (e.g., Q1 meals business).

Volatile external environment FY27

null

Mitigation:Strategic reset, increased focus on consumer, concentrated investment, strengthened execution, cost reduction, balance sheet strengthening.

Higher interest expense FY27

$25 million higher year-over-year (FY27), $345 million to $350 million (FY27 total)

Mitigation:Dividend reset to direct $170 million annually towards debt reduction; aiming for ~3x net leverage ratio; considering hybrid issuance for refinancing.

Lapping extra week in prior year's Q4 Q4 FY26

Estimated high single-digit impact on adjusted EBIT and EPS

Mitigation:N/A (one-time comparison effect)

What to watch in Q1 FY27

Snacks division organic sales trajectory

Q2 FY27
Current High single digits down in Q1 FY27
Target Softening volume declines and strengthening topline in Q2 FY27

Why it matters

Snacks performance is a major drag on overall company results, and its recovery is key to achieving full-year guidance.

Q1 for Snacks is going to be very, very challenging. It will start to build back as we get in the back quarters the topline will start to strengthen, it will still be down, but the volume declines will soften.

Q&A highlights

How will organic sales and EPS growth evolve throughout the fiscal year, especially given Q1 expectations?

Management expects MMB organic sales to be down slightly but consistent throughout FY27. Snacks Q1 will be the low point, with modest improvement throughout the year driven by innovation and brand support. Gross margin will be down significantly in Q1, improve in Q2, and be positive in H2. EPS will sharply decline in Q1 but be positive by Q4.

“From a gross margin perspective, it will be down significantly in Q1... And then that gross margin will get much better in Q2. And then we anticipate will actually be positive in the second half. Gross margin for the total year, probably down 50 to 100 basis points but will get sequentially better as the year goes on. And from an EPS perspective, obviously, a fairly sharp decline in Q1 will get sequentially better, and we think we will be positive EPS by the fourth quarter.”

asked by Tom Palmer · answered by Todd Cunfer

2 min read 6 chapters

Detailed narrative

Strategic Reset and Operational Focus

The company is undertaking a strategic reset to improve performance, focusing on consumer insights, speed, and execution. This includes strengthening leadership, streamlining the operating model, and investing in commercial capabilities like R&D and revenue growth management (RGM). The goal is to translate consumer insights into relevant products and brands more rapidly, as demonstrated by recent innovations such as Campbell's Nourish and Goldfish gluten-free. Management believes these capabilities, if in place earlier, would have led to faster adaptation and better outcomes.

Cost Savings and Margin Recovery Initiatives

A new $500 million enterprise-wide savings program is being launched through FY2030, with $350 million being incremental to prior plans. This program includes a 13% reduction in the salaried workforce, a major procurement savings initiative across direct and indirect spending, and supply chain network optimization. These initiatives are crucial for offsetting elevated inflation (5-6% raw material, double-digit logistics) and driving margin recovery, particularly in the second half of FY2027, with over $100 million expected in FY27 alone.

Snacks Division Turnaround Efforts

The Snacks division faced significant challenges in FY2026, with organic net sales declining 6%. Management is focused on a turnaround, prioritizing a return to core fundamentals, cost reduction, RGM capabilities, and improved everyday execution. Goldfish is showing encouraging trends, with core consumption returning to growth, supported by double-digit e-commerce. However, Salty Snacks (especially chips) remain weak and are expected to take longer to recover, with Q1 FY27 projected to be very challenging for the division.

Meals & Beverages Momentum and Growth Pillars

The Meals & Beverages division showed stronger performance, with organic net sales up 3% in Q4 FY26, driven by 0.8% U.S. retail consumption growth. Semi-scratch cooking, representing over 50% of the division's retail sales, has been a key growth driver, with a 4-year CAGR of over 5%. Brands like Swanson, Pacific, and Rao's are performing well, with Rao's continuing its strong growth trajectory (9.6% Q4 consumption) and expanding household penetration to 18.9%.

Pricing Strategy and Market Dynamics

The company is implementing selective commodity-driven pricing actions on about 60% of its portfolio, averaging a 4-5% price increase, while making targeted price investments in other areas, particularly in the Meals business for Q1 innovation and holiday programming. Management acknowledges potential near-term volume pressure due to pricing, assuming a 1.5x elasticity, but views these actions as necessary to protect margins and fund brand investments. They note that previous price reductions by peers have yielded underwhelming results.

Capital Allocation and Balance Sheet Strengthening

To improve cash conversion and accelerate deleveraging, the company is reducing net working capital and prioritizing high-return capital projects. A significant decision was the 36% reduction in the quarterly dividend to $0.25 per share (annualized $1), which is expected to free up approximately $170 million annually for debt reduction. The goal is to reduce the net leverage ratio from 4.3x to approximately 3x and maintain an investment-grade credit rating.

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