Campbell’s goes ice cold as prices fall and guidance is slashed

Campbell’s reported second-quarter earnings that were just fine on the bottom line, but that’s where the good news ends.

Shares are down 5% in the premarket as even that good number comes with a wart attached: while adjusted earnings per share did surprise to the upside ($0.74 versus $0.72), that was still down from $0.80 in the same period the prior year.

Organic net sales fell 2% year on year, a worse result than the more mild slip the Street was looking for. This metric strips out the impact of the company’s acquisition of Sovos Brands (which owns the oh-so-delicious Rao’s). The decline in organic net sales was wholly attributable to a drop in the company’s net price realization. Lower prices failed to spur any uptick in volumes sold, which were flat.

Management also slashed its guidance for the full year. Its high-water mark for organic sales growth would now just be treading water, as its outlook calls for this to be down 2% or flat, compared to its previous projection that these would be flat or rise by up to 2%.

The company also now sees adjusted EPS down on a full-year basis versus its fiscal 2024.

Given the global trade backdrop, those numbers might be on the optimistic side.

“The company’s guidance does not reflect any impact from potential import tariffs by the US government and potential retaliatory actions taken by other countries, given the tariff and trade environments are uncertain and rapidly evolving,” the company’s press release said.

If there’s a silver lining, it’s that Campbell’s has been a laggard, rather than a bellwether, among consumer staple names. Shares are down 6% over the past year, versus a 9.9% gain for the Consumer Staples Select Sector SPDR Fund.

“Campbell’s revision lower of its fiscal 2025 sales and adjusted Ebit guidance underscores the difficulties in spurring growth that packaged-food companies have been contending with over the past year, hoping that easier comparisons could help reported numbers,” Bloomberg Intelligence analyst Diana Rosero-Pena wrote.