Campbell Soup’s Earnings Call: Mixed Results and Challenges Ahead

Campbell Soup Company ((CPB)) has held its Q3 earnings call. Read on for the main highlights of the call.

The latest earnings call from Campbell Soup Company painted a mixed picture, with strong performance in the Meals and Beverages division, driven by consumer trends favoring home cooking, contrasting with underperformance in the Snacks division due to competitive pressures and category softness. The company’s financial outlook is further complicated by tariffs and a lowered full-year earnings guidance.

Meals and Beverages Division Outperformance

The Meals and Beverages division of Campbell Soup Company reported a 6% increase in organic net sales, fueled by a 7% growth in volume and mix. This division outperformed category consumption, particularly in condensed cooking soups, broth, and Italian sauces, contributing significantly to the company’s overall strong performance.

Stable Performance of Leadership Brands

Campbell’s sixteen leadership brands, which account for 90% of total net sales, showed stability in the third quarter, with more than half either holding or gaining market share. The Meals and Beverages leadership brand consumption increased by 2%, underscoring the division’s robust performance.

Cost Savings and Efficiency Improvements

The company achieved approximately $110 million in total savings as part of its $250 million cost savings program. This reflects ongoing productivity improvements and cost-saving initiatives that are crucial for maintaining financial health.

Positive Consumer Trends for Home Cooking

A growing consumer preference for home-cooked meals has led to increased consumption in the Meals and Beverages segment. This trend has been a key driver of the division’s strong performance, aligning with broader consumer behavior shifts.

Snacks Segment Underperformance

The Snacks division faced challenges, with a 5% decline in organic net sales due to lower volume and mix. The segment’s leadership brand consumption also declined by 3%, as it grappled with heightened competitive pressures and category softness.

Lowered Full-Year Earnings Guidance

Campbell Soup Company has adjusted its earnings expectations to the low end of the guidance range, citing a slower than anticipated recovery in the Snacks business as a primary factor.

Impact of Tariffs on Financial Performance

The company anticipates a net incremental headwind of $0.03 to $0.05 per share for fiscal 2025 adjusted EPS due to tariff-related costs, which poses a challenge to its financial outlook.

Decreased Adjusted EPS

Adjusted EPS decreased by 3% from the previous year, impacted by lower base business performance and increased levels of debt and interest rates.

Forward-Looking Guidance

Looking ahead, Campbell Soup Company expects adjusted earnings for the full fiscal year to be at the low end of the guidance range, primarily due to the slower recovery in the Snacks segment. While organic net sales grew by 1%, driven by the Meals and Beverages segment, the Snacks division’s decline remains a concern. The company is cautious about the potential impacts of tariffs, which could further affect fiscal 2025 adjusted EPS.

In conclusion, Campbell Soup Company’s earnings call highlighted a mixed performance, with strong results in the Meals and Beverages division overshadowed by challenges in the Snacks segment. The company’s financial outlook is tempered by tariff-related costs and a cautious full-year earnings guidance, reflecting the dynamic macro environment and shifting consumer trends.