CPB · Q2 2025 Earnings

Bearish

Campbell's Company (The)

Reported September 3, 2025

30-second summary

Campbell's closed FY2025 inside its prior guide ($2.97 adjusted EPS, organic net sales –1%) but used the print to introduce a FY2026 outlook that effectively resets the earnings base: adjusted EPS of $2.40–$2.55 (–18% to –12% YoY vs the company's comparable 52-week ex-divestiture FY25 base of $2.91, not the reported $2.97) and adjusted EBIT down 9–13%, with roughly two-thirds of the EPS decline attributed to net tariff impact. At the midpoint, FY26 EPS of $2.475 vs the $2.91 comparable base implies ~$0.435 of erosion, of which ~$0.29 (two-thirds) is tariff-driven. For context, FY2025 net tariff impacts were only an approximate $0.02 headwind to adjusted EPS — the FY2026 tariff drag is an order of magnitude larger. Q4 itself was the soft underbelly — organic net sales –3%, Meals & Beverages organic –3%, Snacks organic –2% — confirming that the Snacks "recovery" never arrived and Meals & Beverages decelerated as the Sovos lap finished. This is a guide-down quarter dressed as an in-line close.

Headline numbers

EPS

Q2 FY2025

$0.62

Revenue

Q2 FY2025

$2.32B

+1.0% YoY

Gross margin

Q2 FY2025

30.4%

Operating margin

Q2 FY2025

11.6%

Key financials

Q2 FY2025

Metric	Q2 FY2025	YoY	Q1 FY2025	QoQ
Revenue	$2.32B	+1.0%	$2.48B	-6.2%
EPS	$0.62	—	$0.73	-15.1%
Gross margin	30.4%	—	29.4%	+100bps
Operating margin	11.6%	—	6.5%	+510bps

Guidance

Management dramatically cut FY2026 earnings guidance—now (18)% to (12)% decline vs. FY2025—primarily due to tariff headwinds (~$0.15–0.20 per share impact), while FY2025 results landed at the midpoint of prior guidance; tariff mitigation efforts expected to offset ~60% of gross exposure in FY2026.

Guidance is issued for both next quarter and the full year. Both may appear below.

Actuals vs prior guidance

Metric	Period	Prior guide	Actual	Δ	Result
Adjusted EPS	FY2025	$2.95 to $3.05	$2.97	in-line (midpoint of prior range)	Beat
Organic Net Sales	FY2025	(2)% to 0%	(1.0)%	in-line (within prior range)	Beat
Adjusted EBIT Growth	FY2025	+3% to +5%	$321M	Reported absolute value only; prior guide was growth %—comparison limited without prior-year EBIT baseline, but qualitative miss evident	Missed

New guidance

Metric	Period	Guide	YoY
Adjusted EPS	FY2026	$2.40 to $2.55	(18)% to (12)%
Organic Net Sales	FY2026	(1)% to +1%	—
Adjusted EBIT	FY2026	(13)% to (9)%	—
Adjusted Effective Tax Rate	FY2026	approximately 24%	—
Adjusted Interest Expense	FY2026	$320 million to $325 million	—
Diluted Share Count	FY2026	approximately 300 million shares	—
Capital Expenditures	FY2026	approximately 4% of net sales	—
Estimated Tariff Impact	FY2026	Gross tariffs approximately 4% of COPS with mitigation of approximately 60%	—

Segment performance

Q2 FY2025

Segment	Q2 FY2025	YoY
Meals & Beverages	$1.202B	—
Snacks	$1.119B	+2.0%
Meals & Beverages Organic Growth	-3.0%	—
Snacks Organic Growth	-2.0%	—

Platform metrics

Q2 FY2025

Segment	Q2 FY2025
Organic Net Sales Growth (Q4)	-3.0%
Organic Net Sales Growth (FY2025)	-1.0%
Cost Savings Program Delivered (FY2025)	$145M of $250M target

Profitability

Q2 FY2025

Segment	Q2 FY2025
Adjusted Gross Profit Margin	30.5%
Adjusted EBIT	$321M
Operating Cash Flow (FY2025)	$1,131M

Management tone

No earnings call transcript was available; tone analysis is deferred to next quarter. The press-release framing itself signals the shift — last quarter management pinned FY2025 to the "low end" of EPS while still using growth language for EBIT (+3% to +5%); this quarter the entire FY2026 EBIT envelope is negative (–13% to –9%) and EPS is guided down double-digit percent off the $2.91 comparable base. The tariff narrative also stepped up materially: FY2025 closed with only ~$0.02 of net tariff headwind, while FY2026 carries ~$0.29 at the midpoint — roughly two-thirds of the total EPS decline. The arc from "slower than anticipated Snacks recovery" (Q3) to "(12)% to (18)% EPS decline driven two-thirds by tariffs" (Q4) is a step-function change in posture.

Answers to last quarter's watch list

Snacks organic growth trajectory — Snacks organic was –2% in Q4 (FY –3%), a second consecutive quarter of organic decline. The "recovery" framing from prior quarters has effectively been retired; FY2026 organic guide of –1% to +1% relies on stabilization that has not yet shown up in the print.

Resolved negatively

Adjusted gross margin defense — Q4 adjusted gross margin came in at 30.5% (FY 30.6%), broadly holding vs the 30.1% Q3 level. The defense held in FY2025, but the FY2026 EBIT guide of –9% to –13% combined with marketing investment stepping up to 9–10% of sales implies meaningful margin compression ahead.

Continue monitoring

Tariff disclosure evolution — Disclosure expanded materially: from a $0.03–$0.05 per-share FY2025 overlay (actual outturn ~$0.02) to a quantified FY2026 framework of gross tariffs at ~4% of COPS with ~60% mitigation. Tariffs are now pulled into the headline EPS guide, where they drive roughly two-thirds of the FY2026 EPS decline (~$0.29 off the $2.91 comparable base). The range widened in dollar terms — this is the bear case made explicit.

Resolved negatively

Meals & Beverages organic growth ex-Sovos — With the Sovos lap completed, the segment printed reported 0% and organic –3% in Q4, a sharp deceleration from Q3's +6% organic. The underlying portfolio is weaker than the prior reported numbers implied; this is the swing factor for FY2026.

Resolved negatively

Shareholder return pace — FY operating cash flow of $1.13B and FCF of $705M support the current return program, but with FY2026 EBIT guided down 9–13% and EPS down 12–18%, the cash envelope tightens. The company didn't flag a buyback change in the release.

Continue monitoring

What to watch into next quarter

Q1 FY2026 organic net sales by segment — the FY guide of –1% to +1% assumes Snacks stabilization and continued Meals & Beverages momentum. A third consecutive quarter of Snacks organic decline, or Meals & Beverages organic below the FY2025 –3% Q4 exit rate, would put the FY guide low end in play immediately.

Tariff mitigation execution — the ~60% mitigation assumption is the swing factor on the EPS bridge. Gross tariffs at ~4% of FY25 COPS (~$285M) imply a 10-point shift in mitigation moves EPS by roughly $0.07/share after tax. Watch for any updates that move the gross 4%-of-COPS exposure or the mitigation rate.

Marketing investment phasing — 9–10% of net sales is a step-up from the FY2025 run rate. Watch whether the spend is front-loaded into H1 (further pressuring early-quarter EBIT) and whether it produces measurable share gains in Snacks.

Adjusted gross margin compression — the FY2026 EBIT bridge implies margin pressure beyond what marketing alone explains. Watch whether Q1 gross margin holds the 30%+ line or breaks below it; a sub-30% print would mean tariff mitigation is lagging.

Cost savings program pace — $145M of the $375M multi-year target (raised this quarter from $250M) delivered through FY2025, with $70M incremental guided for FY2026. Tracking the cadence matters because the program is the principal internal offset to tariff drag.

Sources

Campbell's Q4 FY2025 press release (exhibit 99.1), filed via SEC EDGAR: https://www.sec.gov/Archives/edgar/data/16732/000001673225000105/exhibit991-q42025.htm
Campbell's Q3 FY2025 press release (exhibit 99.1, prior period reference): https://www.sec.gov/Archives/edgar/data/16732/000001673225000063/exhibit991-q32025.htm

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