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Campbell Soup Earnings: Tariff Headwinds Weigh as Revenue Declines 3%

  • Writer: Hardik Shah
    Hardik Shah
  • 4 minutes ago
  • 4 min read
Campbell Soup Company - delivering consumer value across distinct needs
Source: CPB Earnings Presentation

TLDR


• Revenue Strength: Net sales fell 3% (organic –1%) amid volume declines across Meals & Beverages and Snacks.

• Margin Trends: Adjusted gross margin contracted 150 bps to 29.9%, pressured by tariffs and inflation despite cost savings.

• Forward Outlook: FY26 guidance reaffirmed; management expects mitigation of ~60% of tariff impact via pricing, productivity, and sourcing.


Business Overview


Campbell Soup Company (NASDAQ: CPB) is a North America–focused Consumer Packaged Goods (CPG) company with a portfolio spanning Meals & Beverages and Snacks. Its 16 leadership brands account for ~90% of enterprise revenue and include Campbell’s soups, Swanson, Chunky, Pacific Foods, Prego, Rao’s, V8, Pepperidge Farm, Goldfish, Snyder’s of Hanover, Cape Cod, Kettle Brand, Lance, and Late July.


The company sells primarily through U.S. and Canadian retail, club, e-commerce, and foodservice channels. Campbell continues to experience elevated consumer interest in value, at-home cooking, premium experiences, and health & wellness—trends shaping both innovation and pricing strategies.


Campbell Soup Earnings


Revenue

  • Net Sales: $2.677B, down 3% YoY; organic sales –1%.

  • Declines driven by volume/mix (–3%) partly offset by net price realization (+1%).

  • Divestitures (Pop Secret, noosa) contributed to reported declines.


Segment performance:

  • Meals & Beverages: –4% reported; –2% organic. Weakness in U.S. soup, Canada, SpaghettiOs, Pace, and V8; offset by gains in Rao’s.

  • Snacks: –2% reported; –1% organic. Declines in contract brands, Snyder’s pretzels, bakery, Goldfish, and Cape Cod; offset by Pepperidge Farm cookies.


Margins

  • Adjusted Gross Margin: 29.9% (–150 bps YoY).

  • Drivers:

    • Cost inflation and supply chain costs (+520 bps headwind).

    • Tariffs: Gross negative impact of 200 bps.

    • Partially offset by price realization and cost savings.


Profitability

  • Adjusted EBIT: $383M, down 11% YoY.

  • Adjusted EPS: $0.77, down 13% primarily due to lower EBIT.

  • Net earnings: $194M (–11%).

  • Cash flow from operations: $224M, flat YoY.

  • Capex: $127M; management continues to invest in capacity, innovation, and supply chain.


“Our first quarter performance was in line with expectations as we navigated a dynamic operating environment… Consumers remain intentional in their shopping behaviors.” — CEO Mick Beekhuizen 

Forward Guidance


Campbell reaffirmed FY26 guidance:

Metric

FY26 Guide

Notes

Organic Net Sales

–1% to +1%

Lapping divestitures and 53rd week.

Adjusted EBIT

–13% to –9%

Tariff headwinds remain significant.

Adjusted EPS

$2.40–$2.55

Neutral impact expected from La Regina acquisition.


Tariff Risk & Mitigation

  • Tariffs equal ~4% of cost of goods sold, with 60% expected mitigation through pricing, cost savings, productivity, sourcing, and supplier collaboration.

  • Net EPS impact in Q1 was –$0.04 despite a gross impact of –$0.14.


“We continue to expect to mitigate approximately 60% of tariff impact through inventory management, sourcing, productivity, cost savings, and surgical pricing.” — CFO Todd Cunfer 

Operational Performance


Cost Savings

  • Achieved $15M in new savings in Q1.

  • Cumulative progress: $160M toward FY28 target of $375M.

  • Savings used to offset inflation and tariff costs.


Meals & Beverages Snapshot

  • Declines in U.S. soup (–2%), SpaghettiOs, Pace, and V8.

  • Broth grew for the ninth consecutive quarter, driven by strong buy rates and millennial adoption (Swanson).

  • Condensed cooking soups added 2M new buyers, including 1.2M younger households.

  • Rao’s remained the #1 premium sauce brand with sustained consumption growth and higher repeat rates.


Snacks Snapshot

  • Category softness persists; consumers increasingly selective.

  • Strong performers: Pepperidge Farm cookies, Snack Factory, Late July.

  • Areas under pressure: Goldfish, Cape Cod, Snyder’s.

  • Holiday activation and pack architecture expected to support H2 stabilization.


“Reigniting Goldfish is a top priority… we remain focused on value, innovation, and omnichannel execution.” — CEO Mick Beekhuizen 

Market Insights


Consumer Trends

  • Consumers remain intentional, value-driven, and increasingly motivated by premium experiences, flavor exploration, and health & wellness—especially in snacks.

  • At-home cooking continues to be a structural demand tailwind for Meals & Beverages.

  • Snacking occasions remain strong, but purchasing decisions have shifted toward differentiated or better-for-you offerings.


Retail Dynamics

  • Retailer inventory build in snacks created a temporary mismatch between consumption (–2%) and shipments.

  • Promotional intensity is rising in the category, especially heading into holidays and sports season.

  • GLP-1 concerns and affordability pressures create subsegment-level volatility (chips vs pretzels vs crackers).


Consumer Behavior & Sentiment


  • Value-seeking behavior is elevated, especially in eating soups, crackers, and pretzels.

  • Younger cohorts (millennials, Gen Z) continue to over-index on broth, cooking soups, and premium sauces.

  • Channel shifts: Club and omni-channel growth remain important as consumers trade into multipacks or high-value offerings.

  • Households increasingly seek convenience + premiumization (e.g., Rao’s, Milano seasonal LTOs).


Strategic Initiatives


Portfolio Optimization

  • Acquisition of 49% of La Regina for $286M, strengthening supply security and innovation pipeline for Rao’s.

  • Option to acquire the remaining 51% in future years at a valuation reflecting performance.


Innovation Pipeline

  • Pepperidge Farm seasonal LTOs driving category growth.

  • Snack Factory flavor-forward innovations (Pumpkin Spice, White Peppermint) supporting pretzel momentum.

  • Rao’s innovation to expand across sauces, ready-to-serve meals, and new format extensions.


Digital & Omnichannel

  • Strengthened activation across delivery, retail media, and in-store merchandising.

  • Back-to-school Goldfish program delivered share leadership within the 13-week window.


Capital Allocation


  • Dividends: $120M paid in Q1; commitment to consistent returns.

  • Share repurchases: $24M; ~$174M remains under anti-dilutive program.

  • Debt: Net leverage at 3.7×; long-term goal remains 3×.

  • Liquidity: $168M cash; $1.4B available under revolver.


The Bottom Line


Campbell delivered an expected but pressured quarter as tariff impacts and consumer selectivity weighed on margins and volumes.


Three investor implications stand out:

  1. Tariff mitigation is the central 2026 storyline—execution against productivity, sourcing, and pricing will determine margin stability.

  2. Rao’s remains a secular growth engine, and the La Regina stake deepens Campbell’s control over quality, supply, and innovation.

  3. Snacks stabilization in 2H is critical, particularly the turnaround of Goldfish and Snyder’s, alongside sustained cookie and BFY momentum.


Investors should watch: pricing elasticity in soup, Goldfish volume recovery, tariff cost tracking vs. mitigation, and execution during seasonal periods.



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