Campbell Soup(US:CPB) ZACKSยท2024-08-28 16:30Core Insights - Campbell Soup Company (CPB) is strategically focusing on enhancing its Snacks division, which has shown resilience amid various challenges [1][3] - The divestiture of the Pop Secret popcorn business is aimed at prioritizing the Snacks segment, which accounted for 46.3% of the company's sales in Q3 of fiscal 2024 [3][5] - The Snacks category has experienced an average consumption growth of 8%, outperforming overall food and historical snack growth averages [3] Financial Performance - The Pop Secret divestiture is expected to reduce Campbell Soup's earnings per share (EPS) by nearly 4 cents in fiscal 2025, with net sales of approximately $120 million recorded in fiscal 2024 [2] - Campbell Soup reported a 6% rise in sales during Q3 of fiscal 2024, largely due to the addition of Sovos Brands, which contributed 7 percentage points to net sales growth [7] - The company anticipates steady year-over-year volume growth and double-digit increases in adjusted EBIT and adjusted EPS in Q4 [8] Strategic Moves - The divestiture of non-core assets like Pop Secret reflects Campbell Soup's commitment to optimizing its portfolio for long-term growth [13] - The acquisition of Sovos Brands in March 2024 has been beneficial, with strong performance from its product lines, particularly Rao's [6][7] - Power brands now represent two-thirds of the Snacks business, providing a solid foundation for sustained growth [5] Market Position - Campbell Soup's shares have increased by 14.8% over the past three months, outperforming the industry growth of 3.9% and the broader Zacks Consumer Staples sector [9] - The company is navigating a dynamic macroeconomic environment, with expectations of organic net sales growth being nearly flat to down 1% in fiscal 2024 [11] Cost Management - The company has been facing cost inflation, particularly in inputs like tomatoes, olive oil, and cocoa, but productivity initiatives and cost-saving programs are expected to mitigate these impacts [12]