Key Takeaways:
Campbell's will cut 13% of salaried staff and close two snack plants under a $500 million savings plan after the CEO called results unacceptable.
"Campbell's has adopted a much more aggressive self-help stance," Barclays analysts said, describing the restructuring as a potential catalyst for improvement.
The Camden, New Jersey-based company reported fiscal fourth-quarter net sales of $2.1 billion, down 8 percent from a year earlier, with adjusted earnings per share falling 37 percent to 39 cents. Gross margin contracted 310 basis points to 27.3 percent as corn, wheat and sugar costs climbed. Campbell's also cut its quarterly dividend 36 percent to 25 cents a share and plans to eliminate more than 1,750 jobs.
The company guided fiscal 2027 net sales to decline 2 percent to 4 percent, with adjusted EPS of $1.65 to $1.80, both below Wall Street estimates. Shares fell about 6 percent in pre-market trading to $22.30, leaving the stock down roughly 23 percent year to date with a market value near $7.1 billion.
The restructuring follows a quarter in which the two operating segments diverged. Snacks volumes fell 6 percent, while meals and beverages volumes rose 3 percent with pricing stable. Campbell's has implemented average price increases of 4 percent to 5 percent across about 60 percent of its portfolio, with the benefit expected to flow through from the second quarter.
The broader packaged-food backdrop remains soft. Lower-income shoppers are shifting toward private-label products, and Reuters noted a 10.75-ounce can of Campbell's tomato soup priced at $1.48 at Walmart, compared with 70 cents for the retailer's Great Value equivalent. Growing use of GLP-1 weight-loss drugs is also weighing on snack demand, a pressure shared by peers General Mills, Hormel Foods and Kraft Heinz.
Wall Street remains cautious. RBC Capital rates Campbell's sector perform with a $21 price target, UBS holds a sell rating at $18 and TD Cowen sees a hold at $22, with the consensus sitting at reduce. Barclays' more constructive read hinges on whether the cost program offsets weaker volumes and higher input costs.
The turnaround now rests on execution of the savings plan and the pricing actions taking hold without further eroding demand. Investors will watch the fiscal 2027 earnings calls for evidence that margins stabilize even as sales stay subdued, and whether the dividend cut to 25 cents a share proves sufficient to fund debt reduction.
This article is for informational purposes only and does not constitute investment advice.
