Soup Giant Campbell's Q2 Earnings: Sales Miss Despite Sovos Boost, Cuts Full-Year Outlook

Canned soup products maker The Campbell’s Company CPB shares are trading lower in premarket on Wednesday.

The company reported second-quarter sales growth of 9% to $2.685 billion, missing the analyst consensus estimate of $2.74 billion.

The increase was driven by the benefit from the Sovos Brands acquisition. Organic net sales decreased 2% to $2.4 billion, driven by net price realization with flat volume/mix.

Meals & Beverages net sales in the quarter increased 21%, driven by the benefit of the acquisition. Snacks net sales in the quarter decreased 6%.

Gross margin contracted 110 basis points Y/Y to 30.5%. Adjusted EBIT of $372 million increased by 2% Y/Y.

Adjusted EPS of $0.74 beat the consensus estimate of $0.72.

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The company held $829 million in cash and equivalents as of January 26, 2025. Operating cash flow for six months totaled $737 million.

The company has paid $227 million of cash dividends and repurchased common stock of approximately $56 million year-to-date.

As of the end of the second quarter, Campbell had about $205 million remaining under its anti-dilutive share repurchase program in addition to approximately $301 million remaining under its September 2021 strategic share repurchase program.

Through the second quarter, Campbell’s has delivered about $65 million of savings under the $250 million cost savings program announced in September 2024.

“Given the softness in some of our snacking categories, the anticipated sequential top-line improvement did not materialize during the quarter, and we now have a more muted second half expectation. As a result, we are updating our full-year guidance,” said President and CEO Mick Beekhuizen.

FY25 Outlook: Campbell sees net sales growth of 6% to 8% (prior view: 9% to 11%). Adjusted EBIT growth of 3% to 5% (previous view (9% to 11%).

The company expects Adjusted EPS of $2.95 – $3.05, down from the prior view of $3.12 – $3.22 and against the estimate of $3.13.

Meanwhile, the company’s guidance does not reflect any impact from potential import tariffs by the U.S. government and potential retaliatory actions taken by other countries.

Price Action: CPB shares are trading lower by 6.74% at $37.62 in premarket at last check Wednesday.

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