Campbell's Q2 Earnings & Revenues Miss Estimates, Sales Down 5% Y/Y

Core Insights - The Campbell's Company (CPB) reported second-quarter fiscal 2026 results, with both net sales and earnings missing the Zacks Consensus Estimate, reflecting year-over-year declines in performance [1][10]. Financial Performance - Adjusted earnings per share (EPS) were 51 cents, down 31% year over year, missing the Zacks Consensus Estimate of 57 cents [2][10]. - Net sales totaled $2,564 million, a decrease of 5% year over year, and also fell short of the Zacks Consensus Estimate of $2,606 million [3][10]. - Organic net sales decreased 3% to $2.6 billion, attributed to lower volume and an unfavorable product mix, while net price realization remained neutral [3]. Profitability Metrics - Adjusted gross profit fell to $710 million from $815 million, missing the estimate of $753.6 million, with the adjusted gross profit margin declining 270 basis points to 27.7% [4]. - The decline in margin was primarily due to cost inflation, supply-chain expenses, tariff impacts, and unfavorable volume/mix, partially offset by cost-saving measures and modest price realization [4]. Expense Management - Adjusted marketing and selling expenses decreased 3% to $248 million, driven by reduced selling expenses and ongoing cost-reduction initiatives [5]. - Adjusted administrative expenses dipped 3% to $152 million, reflecting cost-saving efforts, though partially offset by higher benefit-related costs and inflationary pressures [5]. Segment Performance - Meals & Beverages segment net sales decreased 4% to $1,650 million, with organic net sales declining 2% due to lower sales in U.S. soup and other products [7]. - Snacks segment net sales decreased 6% to $914 million, primarily due to weaker demand for chips and pretzels, as well as supply constraints [8]. Financial Position - As of the end of the reported quarter, Campbell's had cash and cash equivalents of $561 million and total debt of $7,075 million [9]. - Cash flow from operations for the six months ended February 1, 2026, was $740 million, with capital expenditures of $227 million [9]. Guidance and Outlook - The company has lowered its full-year fiscal 2026 guidance, now expecting organic net sales to decline by 1% to 2%, and adjusted EPS to fall to approximately $2.15 to $2.25 [12]. - Adjusted EBIT is projected to decrease by 17% to 20%, compared to the previous expectation of a 9% to 13% decline [12]. Stock Performance - Shares of Campbell's have lost 18.9% in the past three months, compared to the industry’s decline of 4.5% [13].