Campbell Soup(CPB)2025-06-02 13:02Financial Data and Key Metrics Changes - The third quarter earnings performance exceeded expectations, with reported net sales increasing by 4% driven by the Sovos acquisition and organic net sales growth of 1% [5][29] - Adjusted EBIT increased by 2% year-over-year, resulting in a slight margin decrease due to lower net pricing realization [9][30] - Adjusted EPS was down 3%, with a net positive contribution from the Sovos acquisition [10][30] Business Line Data and Key Metrics Changes - Meals and Beverages division reported organic net sales growth of 6%, driven by volume and mix growth of 7% [13][35] - Snacks business experienced a 5% decline in organic net sales, primarily due to lower volume and mix [20][36] - The overall consumption of Meals and Beverages leadership brands increased by 2%, while Snacks leadership brand consumption declined by 3% [11][13] Market Data and Key Metrics Changes - In-market consumption for Meals and Beverages outpaced category consumption, while Snacks lagged behind due to competitive pressures [7][10] - The consumer environment showed a preference for home-cooked meals, leading to increased demand for Meals and Beverages products [11][62] - The Snacks category faced a 3% decline in in-market consumption, attributed to deteriorating consumer confidence and increased competition [20][72] Company Strategy and Development Direction - The company is focused on near-term in-market execution and mitigating tariff impacts while investing in brand growth and capabilities [8][27] - A growth office has been established to enhance consumer insights, brand activation, and innovation [27] - The company aims to improve efficiency and effectiveness across the organization to facilitate long-term growth [27][41] Management's Comments on Operating Environment and Future Outlook - Management noted that consumers are making more deliberate spending decisions, impacting the Snacks business negatively [6][26] - The company expects adjusted earnings to be at the low end of the guidance range due to slower recovery in the Snacks business [7][39] - There is optimism regarding the sustainability of the at-home cooking trend, which has positively impacted the Meals and Beverages division [60][64] Other Important Information - The company has estimated the net incremental headwind of tariff-related costs to be up to 0.05 per share for fiscal 2025 [39][40] - Capital expenditures for fiscal 2025 are expected to be approximately 4.5% of net sales, reflecting a decrease from prior guidance [41] Q&A Session Summary Question: What is the pressure on the Snacks business? - Management indicated that about two-thirds of the pressure is due to overall category performance and one-third from in-market execution, with a focus on innovation and value [45][47] Question: What are the key factors for fiscal 2026? - Management noted that recovery in the Snacks business is expected to take place in fiscal 2026, with a need for increased marketing support [52][54] Question: How sustainable is the at-home cooking trend? - Management expressed optimism about the sustainability of the at-home cooking trend, supported by the company's diverse portfolio [60][64] Question: What is the impact of tariffs on future guidance? - Management clarified that the estimated tariff impact is being phased in and should not be annualized at this time due to the evolving trade landscape [75][80] Question: What is the growth expectation for Rao's? - Management expects high single-digit growth for Rao's in fiscal 2025, with confidence in the brand's trajectory [83][84]