Campbell's Q4 Earnings Beat Estimates, Organic Sales Drop 3% Y/Y

Core Insights - The Campbell's Company (CPB) reported mixed results for the fourth quarter of fiscal 2025, with earnings exceeding estimates while net sales fell short [1][3] - Year-over-year earnings declined, but net sales increased, primarily due to the acquisition of Sovos Brands [1][3] Financial Performance - Adjusted earnings per share (EPS) were 62 cents, a 2% decrease year over year, but above the Zacks Consensus Estimate of 57 cents [2][9] - Net sales reached $2,321 million, a 1% increase year over year, but below the Zacks Consensus Estimate of $2,334 million [3][9] - Organic net sales fell 3% to $2.2 billion, attributed to lower volume/mix and the reversal of favorable shipment timing [3] Profitability Metrics - Adjusted gross profit decreased to $709 million from $719 million, with the gross profit margin declining by 90 basis points to 30.5% [4][9] - The margin decline was driven by cost inflation and supply-chain expenses, partially offset by productivity benefits and favorable net price realization [4] Expense Analysis - Adjusted marketing and selling expenses rose 5% to $197 million, mainly due to increased advertising and consumer promotion costs [5] - Adjusted administrative expenses fell 4% to $158 million, reflecting cost savings and lower incentive compensation [5] Segment Performance - Meals & Beverages segment net sales were $1,202 million, unchanged from the previous year, with organic sales down 3% due to declines in Rao's pasta sauces and U.S. soup [6] - Snacks segment net sales totaled $1,012 million, a 2% increase year over year, but organic sales decreased by 2% [7] Cash Flow and Capital Management - As of the end of the quarter, Campbell's had cash and cash equivalents of $132 million and total debt of $6,857 million [8] - The company paid $459 million in cash dividends and repurchased nearly $62 million in shares during the period [8] Fiscal 2026 Guidance - For fiscal 2026, CPB anticipates net sales to be flat to down 2%, with organic net sales expected to range from a 1% decline to a 1% increase [13] - Adjusted EBIT is projected to decrease by 9-13%, and adjusted EPS is expected to decline by 12-18%, ranging from $2.40 to $2.55 [13] Strategic Outlook - The company aims to leverage consumer trends towards premiumization and health, while facing challenges from input cost inflation and tariffs [11][12]