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CAMPBELL'S Co (CPB)·Q4 2025 Earnings Summary

Executive Summary

  • Q4 2025 delivered a modest EPS beat vs consensus and slight top-line miss: Adjusted EPS of $0.62 vs $0.57*; Net Sales $2.321B vs $2.3318B*, with organic sales down 3% on shipment timing reversal and Snacks softness . Values retrieved from S&P Global.
  • Adjusted EBIT fell 2% YoY to $321M; adjusted gross margin declined 90 bps to 30.5% on cost inflation and tariffs, partly offset by productivity and cost savings .
  • FY26 guidance points to flat organic sales (-1% to +1%) and lower profitability (Adj. EBIT -13% to -9%, Adj. EPS $2.40–$2.55), with approximately two-thirds of the EPS decline driven by net tariff impact; marketing investment steps up to 9–10% of sales .
  • Strategic tone: management emphasized consumer-led innovation (e.g., Milano White Chocolate cookies), tariff mitigation actions, and expanding the cost-savings program to $375M by FY28 as catalysts to stabilize Snacks and support Meals & Beverages growth .

What Went Well and What Went Wrong

  • What Went Well

    • Meals & Beverages outpaced category consumption; Rao’s returned to high-single digit consumption growth and is approaching $1B brand status (“fourth $1 billion dollar brand”) .
    • Innovation resonated: Milano White Chocolate drove 27% dollar consumption growth for Milano in Q4 and lifted Pepperidge Farm cookies; Kettle Brand Avocado Oil chips and Pacific flavored bone broths cited as strong launches .
    • Cost savings execution: ~$145M delivered in FY25 and target raised to $375M by FY28 to offset tariff headwinds .

  • What Went Wrong

    • Organic net sales declined 3% on shipment timing reversal (ERP-related) and Snacks category softness; adjusted gross margin -90 bps on inflation and tariffs (approx. 30 bps) .
    • Snacks volume/mix -5%; organic -2% in Q4, with pretzels and third-party brands weaker; operating margin down 30 bps to 14.2% .
    • FY26 earnings outlook lowered: Adj. EPS down 12–18%; tariffs (about 4% of COPS) a significant headwind despite planned ~60% mitigation .

Financial Results

MetricQ2 2025 (oldest)Q3 2025Q4 2025 (newest)
Net Sales ($USD Billions)$2.685 $2.475 $2.321
Organic Net Sales (% YoY)-2% +1% -3%
Gross Profit Margin % (GAAP)30.5% 29.4% 30.4%
Adjusted Gross Margin %30.4% 30.1% 30.5%
EBIT ($USD Millions, GAAP)$327 $161 $269
Adjusted EBIT ($USD Millions)$372 $362 $321
Diluted EPS (GAAP, $)$0.58 $0.22 $0.48
Adjusted Diluted EPS ($)$0.74 $0.73 $0.62
Interest Expense ($USD Millions)$80 $80 $85
Effective Tax Rate (GAAP) %30.0% 18.5% 21.2%
Adjusted Effective Tax Rate %24.0% 22.7% 21.6%
Q4 2025 vs Q4 2024Q4 2025Q4 2024YoY Change
Net Sales ($USD Billions)$2.321 $2.293 +1%
Organic Net Sales (% YoY)-3% ——
Adjusted Gross Profit ($USD Millions)$709 $719 -1%
Adjusted Gross Margin %30.5% 31.4% -90 bps
Adjusted EBIT ($USD Millions)$321 $329 -2%
Adjusted Diluted EPS ($)$0.62 $0.63 -2%
Segment Breakdown – Q4 2025Meals & BeveragesSnacksTotal
Net Sales, as Reported ($USD Millions)$1,202 $1,119 $2,321
Volume/Mix (% YoY)-4% -5% -4%
Net Price Realization (% YoY)+1% +2% +2%
Organic Net Sales (% YoY)-3% -2% -3%
Estimated Impact of 53rd Week+7% +7% +7%
Segment Operating Earnings ($USD Millions)$200 $159 —
KPIsQ2 2025Q3 2025Q4 2025
Marketing & Selling (GAAP, $USD Millions)$256 $216 $202
Adjusted Marketing & Selling ($USD Millions)$255 $207 $197
Administrative (GAAP, $USD Millions)$165 $162 $172
Adjusted Administrative ($USD Millions)$156 $150 $158
Other Expenses (GAAP, $USD Millions)$41 $160 $29
Adjusted Other Expenses ($USD Millions)$8 $4 $7
Estimates vs Actuals – Q4 2025Consensus*Actual
Primary EPS ($)0.569*0.62
Revenue ($USD Billions)2.3318*2.321
Values retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Organic Net SalesFY26 vs FY25 Base (52-week)FY25 Base: $9.979B -1% to +1% Maintained near flat
Adjusted EBITFY26 vs FY25 Base (52-week)FY25 Base: $1.458B -13% to -9% Lowered
Adjusted EPSFY26 vs FY25 Base (52-week)FY25 Base: $2.91 $2.40 to $2.55 Lowered
Adjusted Effective Tax RateFY26~24%~24% Maintained
Adjusted Interest ExpenseFY26—$320M–$325M New
Capital ExpendituresFY26—~4% of Net Sales New
Marketing & Selling InvestmentFY26—9%–10% of Net Sales New
Enterprise Cost SavingsFY26—~$70M New
Productivity InitiativesFY26—~5% of COPS incl. tariff mitigation New
Tariff Impact AssumptionFY26—Gross tariffs ~4% of COPS; ~60% mitigation New
Divestiture Impact (Pop Secret, noosa)FY26—-1% to reported Net Sales & Adj. EBIT; -$0.04 EPS New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2025)Previous Mentions (Q3 2025)Current Period (Q4 2025)Trend
Tariffs & MitigationGuidance excluded tariff impact; noted potential $0.03–$0.05 headwind Reaffirmed FY25 at low end excluding tariffs; up to $0.03–$0.05 EPS headwind FY26: gross tariffs ~4% of COPS; ~60% mitigation; two-thirds of EPS decline due to tariffs Increasing headwind, more detail
Snacks StabilizationSofter categories; plans adjusted; organic -3% Organic +1% total; Snacks organic -5%; impairment on Snyder’s Q4 Snacks organic -2% with sequential improvement; expect stabilization 2H FY26 Gradual improvement
Meals & Beverages MomentumCategory value/cooking at home; organic -1% but portfolio strength Organic +6% (M&B) on shipment timing; soup/broth gains Outpaced category; Rao’s high-single digit consumption growth Sustained strength
Innovation & R&DPipeline active; Sovos integration Innovation benefits mixed in Snacks Milano White Chocolate success; Kettle Avocado Oil; Pacific bone broths; FD&C colors removal by 2H FY26 Accelerating focus
Supply Chain & ERP TimingNoosa sale; Sovos ERP transition impact to shipments Favourable shipment timing in Q3 (Sovos SAP) Reversal of Q3 timing impacted Q4 organic sales Normalizing
Cost Savings Program (PEEK)$65M through Q2; FY25 savings $120M expected $110M delivered by Q3 ~$145M delivered; target raised to $375M by FY28 Increased ambition
Digital Transformation/TechAppointed Chief Digital & Tech Officer (Apr PR) —Investing in digital to boost agility/efficiency Building capabilities

Management Commentary

  • CEO: “Meals and beverages in-market consumption continued to outpace the category… We are pleased with Rao’s post-acquisition momentum as it approaches becoming our fourth $1 billion dollar brand.”
  • CEO: “In fiscal 2026, we plan to increase marketing support and new product innovation… we have well-defined and immediate action plans to mitigate more than half of the tariff impact…”
  • CFO: “Gross tariffs are projected at approximately 4% of cost of products sold, approximately 60% related to Section 232 steel and aluminum tariffs… We expect to mitigate approximately 60% of this impact in fiscal 2026.”
  • CFO: “We are increasing our cost savings target to $375 million by the end of fiscal 2028, a 50% increase over the previous estimate.”
  • CEO: “Milano White Chocolate… helped drive both incremental improvement in our cookies business… while the cookies category declined by 1%, total Milano dollar consumption increased 27%.”

Q&A Highlights

  • Guidance phasing: Management expects sequentially better organic trends in Q1 FY26 vs Q4 FY25, with similar margin pressure through the year; Snacks stabilization assumed in 2H FY26 .
  • Tariffs and pricing: Surgical pricing is part of the mitigation toolkit, particularly in soup affected by Section 232 steel/aluminum; inventory management helped trim Q4 tariff impact to ~$0.02 .
  • Sourcing constraints: No US capacity for food-grade tinplate; Rao’s largely made in Italy with limited flexibility; alternative sourcing pursued for rest-of-world IPEA exposures while preserving product quality .
  • Cost savings robustness: Elevated productivity target (~5% of COPS) and expanded PEEK program judged achievable via Sovos integration synergies, network optimization, IT roadmap, indirect spend .
  • Demand mechanics: Household penetration flat-to-slightly up; buy-rate needs support via brand investment, innovation, and price-pack architecture (e.g., Goldfish multipacks) .

Estimates Context

  • Q4 2025 results vs Wall Street consensus: Adjusted EPS $0.62 vs $0.57* (beat); Revenue $2.321B vs $2.3318B* (slight miss). Values retrieved from S&P Global. Actuals cited above .
  • Implications: EPS beat despite gross margin pressure suggests productivity and lower tax aided results; FY26 guidance likely drives downward revisions to forward EPS/EBIT given tariff headwinds and stepped-up brand investment .

Key Takeaways for Investors

  • Q4 quality mixed: EPS beat and sequential Snacks improvement, but organic sales down and margin compression from inflation/tariffs; watch execution on mitigation and pricing .
  • FY26 setup: Expect earnings reset (Adj. EPS $2.40–$2.55) on tariff drag (~4% COPS; ~60% mitigated) and higher marketing (9–10% of sales); top line targeted flat to modestly up .
  • Meals & Beverages remains anchor: Cooking-at-home trend, broth/soup strength, Rao’s growth underpin division performance; sequences should benefit as ERP-related timing normalizes .
  • Snacks path to stabilization: Innovation (Milano White Chocolate, better-for-you chips), distribution and pack architecture, plus marketing support are central to turning consumption/share trends by 2H FY26 .
  • Cost discipline is a lever: Expanded PEEK program ($375M by FY28) and ~5% COPS productivity provide offset fuel for tariffs and investment; monitor delivery cadence .
  • Balance sheet/cash: FY25 operating cash flow $1.13B; dividends $459M and buybacks $62M; capex planned ~4% of sales in FY26—supports ongoing brand and network investments .
  • Trading lens: Near-term narrative likely driven by tariff policy developments, Snacks stabilization evidence, and visibility on FY26 phasing; EPS reset could cap multiple near-term, but execution on innovation/cost saves offers medium-term rerating potential .