Campbell's posts one of worst quarters in years: revenues fell 5%, organic sales dropped 3%

Core Insights - Campbell's reported a significant decline in Q2 FY2026, with revenues falling 4.5% year-over-year to $2.564 billion, missing estimates by $47 million [1] - The Snacks segment experienced a severe downturn, with revenues down 6% and operating earnings plummeting 39% [1] - Management has lowered full-year EPS guidance to $2.15-$2.25, down from a previous range of $2.40-$2.55, raising concerns about the sustainability of its dividend [1] Financial Performance - Q2 revenue of $2.564 billion, down 4.5% year-over-year, and EPS of $0.51, missing estimates by over 10% [1] - Gross profit decreased by 12.45% and operating income fell by 22.88% [1] - The Snacks segment generated $914 million in revenue, a 6% decline year-over-year, with significant drops in chips and pretzels [1] Segment Analysis - Rao's brand achieved over $1 billion in trailing twelve-month net sales, marking a significant milestone [1] - The Meals & Beverages segment reported $1.650 billion in revenue, down 4% year-over-year, with U.S. soup sales also declining by 4% [1] - Weakness in the Prego brand offset the positive momentum from Rao's [1] Market Context - Campbell's stock has hit a 17-year low, with a current price of $21.65 per share, leading to questions about the sustainability of its dividend yield of over 7% [1] - General Mills is facing similar challenges but is executing better, with a year-to-date stock decline of 14% compared to Campbell's 21% [1] - The packaged food sector is grappling with cost inflation and changing consumer preferences, impacting both companies [1]