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Campbell’s Q2'25 Earnings: Slower Snack Recovery Dampens Outlook

  • Writer: Hardik Shah
    Hardik Shah
  • Mar 6
  • 3 min read
Source: Campbell's Earnings Presentation
Source: Campbell's Earnings Presentation

TL;DR

  • Revenue growth driven by Sovos acquisition: Reported net sales increased 9% to $2.7 billion, but organic net sales declined 2%.

  • Profitability under pressure: Adjusted EBIT rose 2%, but adjusted EPS fell 8% to $0.74 due to higher interest expenses.

  • Guidance lowered: Slower recovery in snacks led to revised FY 2025 expectations, with adjusted EPS now projected at $2.95–$3.05.


Financial Results


Campbell’s business spans two key segments: Meals & Beverages and Snacks. The company benefited from the Sovos Brands acquisition, but weaker-than-expected snacking trends led to muted expectations for the second half of FY 2025.


Campbell's Q2'25 Earnings


  • Net Sales: $2.7 billion (+9% YoY), organic sales down 2%.

  • EBIT: $327 million (+3% YoY); adjusted EBIT $372 million (+2%).

  • Net Income: $173 million, down from $203 million in Q2 2024.

  • EPS: Reported EPS fell 15% to $0.58; adjusted EPS declined 8% to $0.74.

  • Cash Flow: $737 million from operations; $283 million returned to shareholders via dividends and buybacks.


Segment Breakdown

  • Meals & Beverages: Net sales surged 21%, largely due to the Sovos acquisition. Organic sales dipped 1% due to softness in SpaghettiOs and U.S. soup.

  • Snacks: Sales declined 6% (-3% organic), driven by weaker Goldfish and Snyder’s pretzel performance.


Management Guidance for FY 2025

Campbell’s adjusted its full-year guidance due to a weaker snack recovery:

  • Revenue Growth: 6%–8% (down from 9%–11% prior guidance).

  • Organic Net Sales: -2% to 0% (previously flat to +2%).

  • Adjusted EBIT Growth: 3%–5% (reduced from 9%–11%).

  • Adjusted EPS: $2.95–$3.05 (down from $3.12–$3.22).


“Second quarter earnings were in line with our expectations despite the dynamic operating environment. Given the softness in some of our snacking categories, the anticipated sequential top-line improvement did not materialize,” said Mick Beekhuizen, President & CEO.

Operational Performance


Industry & Market Trends

  • Consumer Demand: Home-cooking trends bolstered condensed soups and broths, but snacks faced competitive pressure and softer demand.

  • Pricing & Promotions: Increased promotional activity in snacks contributed to margin pressure.

  • Inflation & Supply Chain: Cost inflation impacted margins, though supply chain productivity gains helped mitigate some effects.


Key Business Milestones

  • Sovos Brands Integration: Contributing to growth with Rao’s pasta sauce leading the way (+1.3 share points in Q2).

  • Innovation in Snacks: New product launches, including Kettle Chips with Avocado Oil and Harry Potter-themed Goldfish, aim to drive consumer engagement.

  • E-commerce & Retail Strategy: Campbell’s is refining its price-pack architecture to adapt to evolving consumer spending patterns.


Challenges & Risks

  • Snacks Weakness: Goldfish and Snyder’s of Hanover pretzels underperformed.

  • Macroeconomic Uncertainty: Economic pressures and potential import tariffs could pose further risks.

  • Higher Interest Expenses: Debt from the Sovos acquisition contributed to rising interest costs.


Strategic Initiatives


Campbell’s is focusing on:

  • Brand investments: Increased marketing and innovation to support leadership brands.

  • Supply chain optimizations: Efforts to improve efficiency, particularly in fresh bakery operations.

  • Cost savings acceleration: Raising FY 2025 cost savings target from $90M to $120M.

  • Capital allocation discipline: Returning capital to shareholders while reducing debt levels.


Capital Allocation

  • Dividends: $227 million paid year-to-date.

  • Buybacks: $56 million in share repurchases; $506M remaining in authorization.

  • Debt Management: Net leverage at 3.7x EBITDA, targeting 3.0x by FY 2027.


The Bottom Line


Campbell’s delivered solid Q2 results, but weaker snack sales led to a lowered full-year outlook. The Sovos acquisition is contributing positively, particularly through Rao’s growth, but snack category softness remains a headwind. The company is accelerating cost savings and adjusting its pricing strategy to drive second-half improvement.


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