TLDR
- Campbell’s Q2 adjusted EPS came in at 51 cents, falling short of the 57-cent Wall Street consensus
- Revenue declined 4.5% annually to $2.56 billion, missing the $2.61 billion projection
- The snacks division saw sales plummet 6.2% to $914 million — the first sub-$1 billion quarter since 2021
- Annual adjusted EPS forecast slashed to $2.15–$2.25 from previous guidance of $2.40–$2.55
- Shares have plummeted more than 40% over the trailing 12 months, threatening its S&P 500 position
Campbell’s delivered disappointing fiscal second-quarter results that sent investors heading for the exits. Shares tumbled 5.4% during premarket hours Wednesday, threatening to reach levels not seen since the summer of 2003.
The food giant’s adjusted profit reached 51 cents per share for the quarter, falling short of analysts’ 57-cent projection. Revenue totaled $2.56 billion, representing a 4.5% year-over-year decrease and missing expectations by $50 million.
This marked the company’s second consecutive period of declining sales and its first earnings shortfall since the fourth quarter of fiscal 2023.
Performance weakened across Campbell’s primary operating segments. The snacks division — featuring brands like Goldfish crackers, Snyder’s of Hanover pretzels, Cape Cod potato chips, and Pepperidge Farm products — contracted 6.2% to $914 million. This represents the segment’s first time falling below the $1 billion threshold in four years.
Meanwhile, the meals and beverages unit, encompassing Campbell’s signature soup line along with Prego pasta sauces and V8 beverages, decreased 3.7% to $1.65 billion. While Rao’s premium sauces showed positive momentum, the growth wasn’t sufficient to counterbalance weakness in other categories.
Bottom-line results were equally concerning, with net income dropping 16.2% to $145 million.
Chief Executive Mick Beekhuizen addressed the challenging results directly. “Given our first half results and the current operating environment, we are lowering our full-year outlook to reflect a more cautious view for the balance of the year,” he explained.
Revised Outlook
The company revised its full-year organic net sales projection to a contraction of 1%–2%, a notable downgrade from its earlier forecast calling for a range between a 1% decline and 1% growth. Adjusted earnings per share guidance received an even steeper cut to $2.15–$2.25, down substantially from the previous $2.40–$2.55 range.
Management anticipates adjusted earnings will contract between 12% and 18% in fiscal 2026 versus the prior year, with tariffs on steel and aluminum for canned goods packaging cited as a primary headwind. Beekhuizen indicated the company would fast-track cost reduction initiatives to “stabilize” its struggling snacks business.
Campbell’s has set an ambitious goal of achieving $375 million in cost reductions by fiscal 2028.
Historic S&P 500 Status in Jeopardy
Campbell’s has maintained continuous membership in the S&P 500 since the benchmark index’s inception in 1957 — making it one of approximately 50 original members still included today. However, that distinguished legacy now faces real uncertainty.
The stock has hemorrhaged over 40% of its value during the past year, a stark contrast to the S&P 500’s 21.7% gain over the identical timeframe. The company’s market capitalization stood near $7.5 billion before the earnings release. Following the premarket selloff, that valuation was poised to sink to approximately $6.96 billion — positioning it as the second-smallest constituent in the entire index.
Just last Friday, the index committee removed four companies including Match Group and Molina Healthcare from the S&P 500, all of which ranked among the smallest members.
Sell-side analysts maintain an average 12-month price objective of $28 for CPB shares, representing roughly 12% upside from current trading levels around $25.
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