Campbell's is catering to health-conscious consumers who are cooking more at home

By Tomi Kilgore

Quarterly earnings beat expectations but the full-year outlook was mixed, as profit guidance was below analyst projections but the sales view was a little better

Campbell's stock is rallying as the consumer trend of cooking at home has continued.

Shares of Campbell's Co. rallied Wednesday after the soups, meals and snacks company beat fourth-quarter profit expectations as an "increasingly deliberate" consumer continued to focus on cooking at home.

The company said, however, that it expects earnings to decline over the next fiscal year as it faces "substantial" cost pressures from tariffs imposed by the Trump administration on imported goods, even as it increases efforts to cut costs.

The stock (CPB) climbed 4.8% in morning trading, enough to be among the S&P 500 index's SPX top performers on the day. It has now bounced 8.5% since closing at a 14-year low of $30.41 on July 15.

"As we have seen over the last few quarters, consumers remain cautious and intentional with their spending," said Chief Executive Mick Beekhuizen, according to a FactSet transcript of the post-earnings call with analysts. "They continue to seek value in a variety of ways, such as cooking at home, a behavior that fuels growth in our meals and beverages business."

As part of that trend, consumers are also looking for more flavoring choices and premium at-home offerings that provide health and wellness benefits, which helped boost meals and beverages but acted as a headwind for the snacks business.

Beekhuizen said even as "consumers become increasingly deliberate in their choices," there are areas where consumer demand is growing, and the company is "leaning into these areas."

For the quarter ended Aug. 3, the company booked net income of $145 million, after a loss of $3 million in the comparable period last year.

On an adjusted basis, which excludes nonrecurring items, such as pension losses in the latest quarter and asset-impairment charges a year ago, earnings per share slipped to 62 cents from 63 cents but beat the average analyst estimate compiled by FactSet of 56 cents. That marked the eighth straight quarter with a bottom-line beat.

Sales grew 1.2% to $2.32 billion, just shy of the FactSet consensus of $2.33 billion, as a meals and beverages sales inched up 0.2% to $1.2 billion and snacks sales were up 2.4% to $1.12 billion.

Volume and sales mix declined 4%, while prices increased 2%.

Looking ahead, the company said it expects tariffs in to increase the cost of products sold by about 4% in fiscal 2026, mostly from tariffs on steel and aluminum imports. Chief Financial Officer Carrie Anderson said through various measures, such as inventory management, collaboration with suppliers, alternative sourcing and selective price increases, the tariff impact on costs can be reduced to about 2%.

Still, the company expects fiscal 2026 adjusted earnings per share of $2.40 to $2.55, below the current FactSet consensus of $2.57. Sales for the year are expected to be down 2% to flat, while the current FactSet revenue consensus of $9.99 billion implies a 2.6% sales decline.

Campbell's said it has raised its target for cost cuts by 50%, to $375 million by the end of fiscal 2028 from the previous target provided in September 2024 of $250 million. As of the end of the latest quarter, the company said it has achieved about $145 million of savings under the cost-cut plan.

"The company intends to use these savings as one of several levers to help offset tariff headwinds," Campbell's said.

The stock has dropped 21.3% in 2025, while the Consumer Staples Select Sector SPDR ETF XLP has gained 1.9% and the S&P 500 index SPX has advanced 9.7%.

-Tomi Kilgore

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09-03-25 1056ET