Campbell's guides fiscal 2027 EPS below estimates

Campbell's reported mixed fourth-quarter results and said fiscal 2027 adjusted EPS guidance is below estimates. Adjusted EPS was 39 cents, in line with estimates. Sales were $2.137 billion, below the $2.146 billion consensus estimate, and fell 8% year over year, including a 7-percentage-point impact from the extra week in the prior year. Organic sales declined 1%.

Restructuring charges rose to $52 million from $7 million a year earlier. The company has raised prices across about 60% of its portfolio, with an average increase of 4% to 5% to help offset persistent inflation and protect margins. It assumes a price elasticity of 1.5. Management expects the increases to hurt volumes and net sales but provide a benefit to the bottom line, with stronger price realization beginning in the second quarter.

Adjusted gross profit fell 14% to $611 million. Adjusted gross margin contracted 190 basis points to 28.6%, mainly due to inflation, tariffs and other supply-chain costs. Adjusted EBIT declined 25% to $242 million, primarily due to lower adjusted gross profit. Operating cash flow fell to $1 billion from $1.1 billion, while capital expenditures declined to $361 million from $426 million.

Campbell's returned $496 million to shareholders, mainly through dividends. Campbell's cut its quarterly dividend by 36% to 25 cents per share from 39 cents, lowering the annualized payout to $1 from $1.56. The company said the change is intended to speed debt reduction. The dividend is payable Nov.

2, 2026, to shareholders of record as of Oct. 1, 2026. The company also announced a new cost-savings program targeting $500 million in savings by fiscal 2030. It said actions under way include plant closures and recently completed workforce reductions.

Campbell's has identified about $350 million of incremental savings within the target, including headcount reductions, procurement initiatives and supply-chain network optimization. It said procurement efforts will cover direct and indirect spending, and expects headcount reductions and procurement initiatives to generate significant savings in the current and following fiscal years. Campbell's said its $375 million PEAK program has delivered $225 million in savings through the latest fiscal year, with the remaining $150 million set to roll into the new program. For fiscal 2027, the company expects adjusted EPS of $1.65 to $1.80, below the $1.85 analyst estimate.

Campbell's said organic net sales in Meals & Beverages are expected to decline about 3% at the midpoint in the first quarter, and it expects performance to stay relatively consistent through the year. The company said its Snacks business is expected to hit a low point in the first quarter before improving modestly, helped by innovation, brand support and stronger execution. Campbell's expects inflation to remain a 5% to 6% headwind, with logistics costs rising at a double-digit rate before improving toward year-end.

The company said price realization is expected to remain negative in the first quarter before turning positive in the second quarter as recent pricing actions take effect. Campbell's also said heavy investment in Meals innovation is pressuring first-quarter margins. Campbell's said slotting fees, activation and holiday trade programs are expected to pressure first-quarter margins. The company said gross margin is expected to decline significantly in the first quarter before improving in the second quarter, and that gross margin is projected to turn positive in the second half.

For the full year, Campbell's expects gross margin to decline by about 50 to 100 basis points. It also expects EPS to fall sharply in the first quarter before improving sequentially, with EPS growth expected to turn positive by the fourth quarter. Campbell's shares were down 9.23% at $21.58 at the time of publication on Thursday, according to Pro data.