The Campbell's Company (CPB) Q1 2026 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call reveals a decline in net sales for both Meals & Beverages and Snacks, driven by unfavorable volume/mix, despite favorable pricing. The Q&A highlights ongoing challenges in the Snacks segment and pressure on margins due to inflation and tariffs. While there are efforts to stabilize the Snacks segment and innovate, the guidance indicates declining EBIT and EPS. The La Regina acquisition is positive but not enough to offset broader concerns. Overall, the sentiment is negative, with potential stock price decline due to weak financial performance and guidance.
Key Financial Performance
Organic Net Sales Decreased 1% year-over-year, driven by a 2% decline in consumption. The decline was mainly due to retailers building inventory in Snacks ahead of upcoming promotional activities.
Adjusted EBIT Margin Decreased by 11% year-over-year. The decline was attributed to cost increases and top-line headwinds, despite cost-saving initiatives, improved productivity, and selective in-market pricing increases.
Adjusted Gross Profit Margin Decreased by 150 basis points to 29.9%. This was driven by cost headwinds of 520 basis points, including cost inflation, supply chain costs, and gross tariffs. These were partially offset by cost savings and supply chain productivity improvements.
Adjusted EPS Decreased by 13% to $0.77. The decline was driven by lower adjusted EBIT, partially offset by lower interest expense and a 60 basis point increase in the adjusted tax rate.
Meals & Beverages Organic Net Sales Decreased by 2%, driven by declines in U.S. soup, Canada, SpaghettiOs, Pace Mexican sauces, and V8 beverages. This was partially offset by gains in Rao's. The decline was due to unfavorable volume/mix and partially offset by favorable net price realization.
Snacks Organic Net Sales Decreased by 1%, driven by lower net sales in third-party partner and contract brands, Snyder's of Hanover pretzels, fresh bakery, Goldfish crackers, and Cape Cod potato chips. Gains in Pepperidge Farm cookies partially offset the decline. The decline was due to unfavorable volume/mix and partially offset by favorable net price realization.
Operating Cash Flow Generated $224 million, in line with the prior year. The company prioritized reinvestment into the business and returned cash to shareholders through dividends and share repurchases.
You have reached the limit. Sign up to access full content
Get started
Operating Highlights
Rao's sauces campaign: Focused on the elevated Rao's experience, highlighting the origin of its high-quality ingredients.
Goldfish multipack: Double-digit increases in consumption during the back-to-school period through strong retail execution and promotional support.
Pacific brand: Dollar consumption growth up 25% and volume consumption up 31%.
Rao's sauces growth: Outpaced the Italian sauce category with low single-digit dollar consumption growth and remained the #1 brand in the category.
La Regina acquisition: Acquired a 49% interest in La Regina entities, solidifying the partnership for Rao's sauces.
Category reporting updates: Cape Cod and Kettle Brand chips now compared against the total potato chip category; Late July compared against the total tortilla chip category.
Latin America business realignment: Snacking and meals and beverages retail business in Latin America now managed under Meals & Beverages segment.
Cost savings initiatives: Achieved $15 million in new savings, bringing total cost savings to $160 million towards a fiscal 2028 target of $375 million.
Adjusted EBIT margin: Decreased due to cost increases and top-line headwinds, despite selective pricing increases and productivity improvements.
Marketing and selling expenses: Decreased 2% due to lower selling expenses and cost savings initiatives.
Focus on consumer needs: Strengthened focus on evolving consumer needs, including health and wellness, premium experiences, and value propositions.
Snacks innovation pipeline: Developing innovations like avocado oil in chips and new product launches to align with health and wellness trends.
Goldfish brand strategy: Incremental marketing support, innovation, and strategic value approach to reignite growth.
You have reached the limit. Sign up to access full content
Get started
Risk or Challenges
Organic Net Sales Decline: Organic net sales were down 1%, driven by a 2% decline in consumption, with the difference mainly due to retailers building inventory in Snacks ahead of upcoming promotional activities.
Adjusted EBIT Margin Decline: Adjusted EBIT margin decreased, resulting in an 11% year-over-year adjusted EBIT decline due to cost increases and top-line headwinds.
Cost Pressures: Significant cost pressures, including inflation and supply chain costs, were not fully offset by cost savings initiatives and selective in-market pricing increases.
Tariff Impact: Tariffs had a 200 basis point negative impact on adjusted gross profit margin in the quarter, with gross tariffs projected to be approximately 4% of cost of products sold for fiscal 2026.
Snacks Business Pressure: The Snacks business faced pressure as consumers became more intentional with purchases, leading to volume declines and challenges in certain product categories like pretzels and crackers.
Ready-to-Serve Soup Segment Challenges: The Ready-to-Serve soup segment experienced market share declines due to price increases and the discontinuation of certain product lines.
Competitive Pressures in Snacks: Competitive pressures in the Snacks segment, particularly in pretzels and crackers, led to market share and consumption declines.
Consumer Behavior Shifts: Shifts in consumer behavior, such as increased selectivity in purchases and evolving snacking preferences, impacted sales and market share in key product categories.
Economic Uncertainty: Macroeconomic challenges, including inflation and changing consumer spending patterns, created headwinds for the company's financial performance.
Supply Chain Costs: Elevated supply chain costs, including those related to tariffs and inflation, negatively impacted gross profit margins.
You have reached the limit. Sign up to access full content
Get started
Guidance & Outlook
Fiscal 2026 Guidance Reaffirmation: The company reaffirmed its full-year fiscal 2026 guidance ranges, which exclude the additional week in fiscal 2025. This guidance includes a significant impact from tariffs, projected to be approximately 4% of the cost of products sold. Approximately 60% of this impact is related to Section 232 steel and aluminum tariffs, with the remainder largely from global IEEPA tariffs. The company expects to mitigate approximately 60% of this impact through inventory management, supplier collaboration, alternative sourcing, productivity, cost savings, and selective pricing actions.
Tariff Mitigation Strategies: The company plans to mitigate tariff impacts through inventory management, supplier collaboration, alternative sourcing opportunities, productivity improvements, cost savings, and selective pricing actions. These measures are expected to offset approximately 60% of the tariff impact in fiscal 2026.
La Regina Transaction: The company anticipates closing the acquisition of a 49% interest in two La Regina entities in the second half of fiscal 2026. This transaction is expected to be neutral to the reaffirmed guidance for fiscal 2026 adjusted EPS.
Marketing and Selling Expenses: In the second quarter of fiscal 2026, marketing and selling expenses are expected to be at the upper end of the target range of 9% to 10% of net sales.
Cost Savings Target: The company aims to achieve a fiscal 2028 cost savings target of $375 million, with $15 million in new savings delivered in Q1 fiscal 2026, bringing total savings to $160 million.
Capital Expenditures: The company continues to prioritize reinvestment into the business to drive growth, with Q1 fiscal 2026 capital expenditures amounting to $127 million.
Debt Reduction: The company remains committed to deleveraging its balance sheet towards a goal of 3x net debt to adjusted EBITDA leverage ratio.
You have reached the limit. Sign up to access full content
Get started
Shareholder Return Plan
Dividends Paid: $120 million in dividends were paid during the quarter.
Share Repurchase Program: $24 million in anti-dilutive share repurchases were conducted in the quarter. Approximately $174 million remains under the anti-dilutive share repurchase program.
You have reached the limit. Sign up to access full content
Get started
Key Q&A
Q:What is the reason for the La Regina acquisition and its timing?
A:The La Regina acquisition supports the growth of the Rao's brand by securing a supply of high-quality tomato-based sauces and strengthening the partnership with the Romano family. The investment is expected to enhance innovation and growth opportunities for Rao's. The acquisition involves a $286 million payment for 49% ownership, with a call option to purchase the remaining 51% at a premium, valuing the deal at approximately $600 million. The timing aligns with the integration of the Rao's acquisition and the development of the relationship with the Romano family.
Q:What gives Campbell confidence in stabilizing the Snacks segment in the second half of the fiscal year?
A:Campbell expects stabilization due to easier year-over-year comparisons in the second half and some positive trends in specific snack categories like cookies and pretzels. The company is focusing on innovation, in-market execution, and reigniting growth in key brands like Goldfish. However, challenges remain in certain subcategories like chips and crackers.
Q:How does Campbell view the impact of megatrends like GLP-1 usage and COVID-era overpricing on salty snacks?
A:Campbell acknowledges that snacking is evolving, with trends like premiumization, flavor exploration, and health and wellness shaping consumer preferences. The company is focusing on aligning its portfolio with these trends and ensuring value for consumers. While some subcategories may face challenges, Campbell believes its premium snacking brands are well-positioned to succeed.
Q:How is Campbell addressing the balance between raising soup prices and maintaining affordability?
A:Campbell has implemented selective pricing actions to cover inflationary costs while being mindful of affordability. The company has seen pressure on eating soups but continues to grow in cooking soups. It has taken incremental actions to remain competitive during the soup season and has observed slight growth in ready-to-serve soups recently.
Q:What are the implications of the La Regina deal for Campbell's margins and top-line growth?
A:The La Regina deal is expected to improve margins for the Rao's brand and provide flexibility for investments in innovation and channel strategies. The deal will be EPS neutral in fiscal '26 and is expected to support mid- to high single-digit growth for Rao's.
Q:What are Todd Cunfer's initial perspectives and priorities as Campbell's new CFO?
A:Todd Cunfer sees opportunities to streamline analysis, focus on key investments, and leverage his experience from both large and small companies. He aims to enhance growth, profitability, and cash flow while working with Campbell's strong brands and talented team.
Q:What is Campbell's strategy to reignite growth for the Goldfish brand?
A:Campbell plans to focus on innovation, brand messaging, and price-pack architecture to support growth for Goldfish. The company aims to provide choices within the Goldfish portfolio, such as the new Goldfish pretzel innovation, and improve omnichannel execution to drive buy rate and overall growth.
Q:How does Campbell view its gross margin performance and outlook?
A:Campbell's gross margin was impacted by inflation, tariffs, and other cost pressures, but the supply chain team offset 70% of these costs. Margins are expected to remain under pressure in the first half of the fiscal year but improve in the second half as tariff impacts are lapped and cost initiatives take effect. The company aims to achieve gross margins above 30% over time.
Q:Review of Unclear Management Responses
A:Management avoided directly addressing the specific impact of GLP-1 usage on salty snacks and provided limited details on how they plan to address affordability challenges in the soup segment beyond general statements about selective pricing actions and value focus.
You have reached the limit. Sign up to access full content
Get started
Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Beverages brand
Cunfer
La Regina
Mick
Peppermint
Pumpkin Spice
Snacks brand
brand activation
brand today
campaign
channel brand
commitment
consumer evolving
consumer purchase
cooking behavior
cooking soup
dish
evolving need
experience
family
food value
gathering
health wellness
holiday
ingredient
momentum household
occasion
omni channel
potato chip
quality food
recipe
school
season
share consumption
soup portfolio
tomato
tortilla chip
CPB Transcript
The Campbell's Company (CPB) Q3 2026 Earnings Call Transcript
Neutral6-8
The Campbell's Company (CPB) Q2 2026 Earnings Call Transcript
Unknown3-11
The earnings call reflects mixed sentiments. While there are positive aspects such as reaffirmed guidance, tariff mitigation strategies, and a focus on cost savings, there are concerns about fresh bakery challenges, limited EPS growth, and margin pressures in the Snacks segment. Additionally, the lack of clarity on long-term strategies and potential cost impacts from oil price volatility contribute to a cautious outlook. These factors suggest a neutral stock price movement, balancing positive strategic initiatives with existing challenges.
The Campbell's Company (CPB) Q1 2026 Earnings Call Transcript
Unknown12-9
The earnings call reveals a decline in net sales for both Meals & Beverages and Snacks, driven by unfavorable volume/mix, despite favorable pricing. The Q&A highlights ongoing challenges in the Snacks segment and pressure on margins due to inflation and tariffs. While there are efforts to stabilize the Snacks segment and innovate, the guidance indicates declining EBIT and EPS. The La Regina acquisition is positive but not enough to offset broader concerns. Overall, the sentiment is negative, with potential stock price decline due to weak financial performance and guidance.
The Campbell's Company (CPB) Presents At Barclays 18th Annual Global Consumer Staples Conference 2025 (Transcript)
Neutral9-4
CPB Slides
CPB Report
Frequently Asked Questions
Where does this earnings call transcript come from?
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
How soon is the transcript available after the earnings call ends?
Full verbatim transcripts are typically published within 4–12 hours after the call ends. Same-day availability is guaranteed for all S&P 500 and most mid-cap companies.
Is the transcript edited or altered in any way?
No material content is ever changed or summarized in the “Full Transcript” section. We only correct obvious spoken typos (e.g., “um”, “ah”, repeated 10 times”, or clear misspoken ticker symbols) and add speaker names/titles for readability. Every substantive sentence remains 100% as spoken.
Why do some answers appear as “Unclear” or “Inaudible”?
When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.
Who creates the AI Summary and Key Q&A highlights shown above the transcript?
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
