Campbell's Q4 Earnings "Better Than Expected," RBC Analyst Says

Campbell's Q4 results were better than expected, according to RBC. The company's fiscal Q4 performance was not as bad as bearish expectations. Campbell Soup Company's sales were organized around two areas of activity: soups, sauces, and beverages (54.6% of net sales) and cookies and snacks (54.4%).

The Campbell's Company (CPB) reported mixed results for the fourth quarter of fiscal 2025, with a focus on strategic innovation and cost savings to navigate tariff impacts and market pressures. The company's fiscal Q4 performance was not as bad as bearish expectations, as per RBC.

Key Highlights

- Net Sales and Organic Sales: Net sales increased by 1% to $2.3 billion, while organic net sales decreased by 3% to $2.2 billion. This decline was primarily driven by lower volume/mix, partially related to the expected reversal of the favorable timing of shipments in the third quarter related to the implementation of the company’s existing enterprise-resource planning system for Sovos Brands [2].

- Earnings: Earnings Before Interest and Taxes (EBIT) increased to $269 million, but adjusted EBIT decreased by 2% to $321 million. Adjusted EPS decreased by 2% to $0.62. The additional week in the fourth quarter contributed 7% to net sales, 9% to adjusted EBIT, and 10% to adjusted EPS, or $0.06 per share [2].

- Gross Profit: Gross profit increased to $705 million from $675 million, with a gross profit margin of 30.4% compared to 29.4%. Adjusted gross profit decreased to $709 million from $719 million, mainly driven by cost inflation and other supply chain costs inclusive of a moderate tariff impact [2].

Strategic Initiatives

The company highlighted several strategic initiatives to drive growth and mitigate challenges:

- Innovation: Innovation contributed approximately 3% to net sales in fiscal '25, with successful launches like avocado oil Kettle brand chips and Pacific flavored Bone broth. The company plans to increase marketing support and new product innovation across leadership brands in fiscal '26 [1].

- Cost Savings: Campbell's is expanding its cost-savings program to $375 million by the end of fiscal '28, a 50% increase over the previous estimate. The company is focusing on productivity savings through initiatives like Sovos integration, network optimization, and IT digital roadmap [1].

- Tariff Mitigation: The company is employing surgical pricing initiatives and inventory management strategies to offset tariff impacts. Alternative sourcing is being explored for raw materials impacted by tariffs [1].

Outlook for Fiscal '26

The company expects net sales to be down 2% to flat, with adjusted EBIT declining 9% to 13% and adjusted EPS down 12% to 18% in fiscal '26. The first half of the year is expected to show sequentially better trends compared to Q4, with some pressure in Q1 due to snacks recovery and Meals & Beverages promotion timing [1].

Conclusion

Campbell's Q4 results demonstrate resilience in a dynamic operating environment, with a focus on innovation and cost savings. While the company faces challenges such as tariffs and market pressures, strategic initiatives are in place to drive growth and mitigate these challenges. Investors should closely monitor the company's progress in fiscal '26 and the impact of ongoing strategic initiatives.

References

[1] https://www.gurufocus.com/news/3093699/the-campbells-co-cpb-q4-2025-earnings-call-highlights-navigating-challenges-with-strategic-innovation-and-cost-savings
[2] https://www.thecampbellscompany.com/newsroom/press-releases/campbells-reports-fourth-quarter-fiscal-2025-results-provides-full-year-fiscal-2026-guidance/