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The Campbell's Company (CPB - Free Report) reported mixed second-quarter fiscal 2025 results, with the top line increasing year over year while missing the Zacks Consensus Estimate. The bottom line declined year over year but beat the consensus mark. That said, organic sales declined.
Fiscal second-quarter performance reflects Campbell’s ability to navigate a dynamic operating environment. However, softness in snacking categories led to a lower-than-expected top-line improvement, resulting in a muted second-half expectation and an update to full-year guidance.
CPB’s Quarterly Performance: Key Metrics and Insights
Adjusted earnings were 74 cents, down 8% year over year, due to increased net interest expenses, partly made up by higher adjusted earnings before interest and taxes (EBIT). However, the bottom line beat the Zacks Consensus Estimate of 73 cents.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
The Campbell's Company Price, Consensus and EPS Surprise
Net sales of $2,685 million grew 9% year over year while missing the Zacks Consensus Estimate of $2,738 million. The year-over-year increase in the top line stemmed from the benefit of the Sovos Brands acquisition. Organic net sales dipped 2% due to net price realization and flat volume/mix.
The company’s adjusted gross profit was $815 million, up from $772 million reported in the prior-year quarter. The adjusted gross profit margin contracted 100 basis points (bps) to 30.4%, impacted by cost inflation, supply-chain costs, unfavorable net price realization and the acquisition. These pressures were partially offset by supply-chain productivity improvements and cost savings initiatives.
Adjusted marketing and selling expenses escalated 18% to $255 million, caused by the acquisition and higher advertising and consumer promotion costs in the base business. Adjusted administrative expenditures decreased 2% to $156 million, indicating cost savings initiatives, partially offset by acquisition-related impacts.
Adjusted EBIT increased 2% to $372 million.
Decoding CPB’s Segmental Performance
Meals & Beverages: Net sales reached $1,679 million, up 21% year over year, driven by the acquisition. Excluding this impact, organic net sales declined 1%, implying decreases in SpaghettiOs and U.S. soup, partially offset by growth in food service. A 2% decrease in net price realization was partially offset by a 1% improvement in volume/mix. U.S. soup sales declined due to lower demand for ready-to-serve and condensed soups, partially offset by an increase in broth. Segment operating earnings rose 18%.
Snacks: Net sales totaled $1,006 million, down 6% year over year. Excluding the impact of the Pop Secret divestiture, organic sales declined 3%, caused by lower sales in third-party partner and contract brands, Goldfish crackers and Snyder’s of Hanover pretzels. The decline was attributed to a 2% drop in volume/mix and a 1% decrease in net price realization. Segment operating earnings fell 29%.
Looking at CPB’s Other Financial Metrics
As of the end of the reported quarter, Campbell's had cash and cash equivalents of $829 million and a total debt of $7,675 million. CPB generated $737 million in net cash from operating activities for the six months ended Jan. 26, 2025. Capital expenditures were $211 million in the said period.
CPB paid $227 million in cash dividends and repurchased nearly $56 million in shares year to date. As of the end of the fiscal second quarter, the company had approximately $205 million remaining under its anti-dilutive share repurchase program and $301 million under the September 2021 strategic share repurchase program.
During the fiscal second quarter, Campbell's generated $65 million in savings under its cost savings program of $250 million announced in September 2024.
CPB’s Fiscal 2025 Guidance
Campbell updated its fiscal 2025 guidance to reflect the sale of the noosa yoghurt business, divested on Feb. 24, 2025, and expected to impact net sales by approximately 1 percentage point and dilute adjusted EPS by an estimated 1 cent.
The company now forecasts fiscal 2025 net sales growth of 6-8%, down from its previous 9-11% estimation. Organic net sales are expected to range from a 2% decline to flat compared with the prior outlook of flat to 2% growth.
Adjusted EBIT is estimated to grow 3-5%. With strong first-half progress on cost savings initiatives, full-year 2025 cost savings expectations have been raised to $120 million.
Adjusted EPS is now expected to decline 4% to 1%, ranging from $2.95 to $3.05 compared with the previous forecast of $3.12-$3.22 and the $3.08 reported in fiscal 2024.
Shares of this Zacks Rank #3 (Hold) company have lost 9.6% in the past three months compared with the industry's decline of 4.1%.
The Zacks Consensus Estimate for Post Holdings’ current fiscal-year sales and earnings indicates growth of 0.3% and 2.2%, respectively, from the prior-year reported levels. POST delivered a trailing four-quarter earnings surprise of 22.3%, on average.
Lancaster Colony Corporation (LANC - Free Report) engages in the manufacturing and marketing of specialty food products for the retail and food-service channels in the United States. It currently holds a Zacks Rank #2. LANC delivered a trailing four-quarter earnings surprise of 1.7%, on average.
The consensus estimate for Lancaster Colony’s current financial-year sales and earnings implies growth of 3.1% and 6.1%, respectively, from the year-ago period’s reported figure.
Tyson Foods, Inc. (TSN - Free Report) operates as a food company worldwide. It currently has a Zacks Rank #2. TSN delivered a trailing four-quarter earnings surprise of 52%, on average.
The Zacks Consensus Estimate for Tyson Foods’ current financial-year sales and earnings indicates growth of 0.9% and 22.6%, respectively, from the prior-year reported levels.
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Campbell's Q2 Earnings Beat Estimates, Sales Increase 9% Y/Y
The Campbell's Company (CPB - Free Report) reported mixed second-quarter fiscal 2025 results, with the top line increasing year over year while missing the Zacks Consensus Estimate. The bottom line declined year over year but beat the consensus mark. That said, organic sales declined.
Fiscal second-quarter performance reflects Campbell’s ability to navigate a dynamic operating environment. However, softness in snacking categories led to a lower-than-expected top-line improvement, resulting in a muted second-half expectation and an update to full-year guidance.
CPB’s Quarterly Performance: Key Metrics and Insights
Adjusted earnings were 74 cents, down 8% year over year, due to increased net interest expenses, partly made up by higher adjusted earnings before interest and taxes (EBIT). However, the bottom line beat the Zacks Consensus Estimate of 73 cents.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
The Campbell's Company Price, Consensus and EPS Surprise
The Campbell's Company price-consensus-eps-surprise-chart | The Campbell's Company Quote
Net sales of $2,685 million grew 9% year over year while missing the Zacks Consensus Estimate of $2,738 million. The year-over-year increase in the top line stemmed from the benefit of the Sovos Brands acquisition. Organic net sales dipped 2% due to net price realization and flat volume/mix.
The company’s adjusted gross profit was $815 million, up from $772 million reported in the prior-year quarter. The adjusted gross profit margin contracted 100 basis points (bps) to 30.4%, impacted by cost inflation, supply-chain costs, unfavorable net price realization and the acquisition. These pressures were partially offset by supply-chain productivity improvements and cost savings initiatives.
Adjusted marketing and selling expenses escalated 18% to $255 million, caused by the acquisition and higher advertising and consumer promotion costs in the base business. Adjusted administrative expenditures decreased 2% to $156 million, indicating cost savings initiatives, partially offset by acquisition-related impacts.
Adjusted EBIT increased 2% to $372 million.
Decoding CPB’s Segmental Performance
Meals & Beverages: Net sales reached $1,679 million, up 21% year over year, driven by the acquisition. Excluding this impact, organic net sales declined 1%, implying decreases in SpaghettiOs and U.S. soup, partially offset by growth in food service. A 2% decrease in net price realization was partially offset by a 1% improvement in volume/mix. U.S. soup sales declined due to lower demand for ready-to-serve and condensed soups, partially offset by an increase in broth. Segment operating earnings rose 18%.
Snacks: Net sales totaled $1,006 million, down 6% year over year. Excluding the impact of the Pop Secret divestiture, organic sales declined 3%, caused by lower sales in third-party partner and contract brands, Goldfish crackers and Snyder’s of Hanover pretzels. The decline was attributed to a 2% drop in volume/mix and a 1% decrease in net price realization. Segment operating earnings fell 29%.
Looking at CPB’s Other Financial Metrics
As of the end of the reported quarter, Campbell's had cash and cash equivalents of $829 million and a total debt of $7,675 million. CPB generated $737 million in net cash from operating activities for the six months ended Jan. 26, 2025. Capital expenditures were $211 million in the said period.
CPB paid $227 million in cash dividends and repurchased nearly $56 million in shares year to date. As of the end of the fiscal second quarter, the company had approximately $205 million remaining under its anti-dilutive share repurchase program and $301 million under the September 2021 strategic share repurchase program.
During the fiscal second quarter, Campbell's generated $65 million in savings under its cost savings program of $250 million announced in September 2024.
CPB’s Fiscal 2025 Guidance
Campbell updated its fiscal 2025 guidance to reflect the sale of the noosa yoghurt business, divested on Feb. 24, 2025, and expected to impact net sales by approximately 1 percentage point and dilute adjusted EPS by an estimated 1 cent.
The company now forecasts fiscal 2025 net sales growth of 6-8%, down from its previous 9-11% estimation. Organic net sales are expected to range from a 2% decline to flat compared with the prior outlook of flat to 2% growth.
Adjusted EBIT is estimated to grow 3-5%. With strong first-half progress on cost savings initiatives, full-year 2025 cost savings expectations have been raised to $120 million.
Adjusted EPS is now expected to decline 4% to 1%, ranging from $2.95 to $3.05 compared with the previous forecast of $3.12-$3.22 and the $3.08 reported in fiscal 2024.
Shares of this Zacks Rank #3 (Hold) company have lost 9.6% in the past three months compared with the industry's decline of 4.1%.
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Stocks to Consider
Post Holdings, Inc. (POST - Free Report) operates as a consumer-packaged goods holding company in the United States and internationally. It currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Post Holdings’ current fiscal-year sales and earnings indicates growth of 0.3% and 2.2%, respectively, from the prior-year reported levels. POST delivered a trailing four-quarter earnings surprise of 22.3%, on average.
Lancaster Colony Corporation (LANC - Free Report) engages in the manufacturing and marketing of specialty food products for the retail and food-service channels in the United States. It currently holds a Zacks Rank #2. LANC delivered a trailing four-quarter earnings surprise of 1.7%, on average.
The consensus estimate for Lancaster Colony’s current financial-year sales and earnings implies growth of 3.1% and 6.1%, respectively, from the year-ago period’s reported figure.
Tyson Foods, Inc. (TSN - Free Report) operates as a food company worldwide. It currently has a Zacks Rank #2. TSN delivered a trailing four-quarter earnings surprise of 52%, on average.
The Zacks Consensus Estimate for Tyson Foods’ current financial-year sales and earnings indicates growth of 0.9% and 22.6%, respectively, from the prior-year reported levels.