Packaged food company Campbell's (NASDAQ: CPB) missed Wall Street’s revenue expectations in Q1 CY2025 as sales rose 4.5% year on year to $2.48 billion. Its non-GAAP EPS of $0.73 per share was 11.4% above analysts’ consensus estimates.
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Campbell's (CPB) Q1 CY2025 Highlights:
- Revenue: $2.48 billion (4.5% year-on-year growth)
- Adjusted EPS: $0.73 vs analyst estimates of $0.66 (11.4% beat)
- Adjusted Operating Income: $362 million vs analyst estimates of $341.4 million (14.6% margin, 6% beat)
- Management reiterated its full-year Adjusted EPS guidance of $3 at the midpoint
- Operating Margin: 6.5%, down from 10.5% in the same quarter last year
- Organic Revenue rose 1% year on year (0% in the same quarter last year)
- Sales Volumes rose 2% year on year (0% in the same quarter last year)
- Market Capitalization: $10.15 billion
StockStory’s Take
Campbell's first quarter results were shaped by diverging performances in its core segments. CEO Mick Beekhuizen attributed the quarter's outperformance to strong demand in the meals and beverages division, which benefited from a continued consumer shift toward at-home cooking and a successful marketing activation around condensed soups and mac and cheese. The CEO specifically highlighted increased household penetration among millennials and consistent share gains in condensed soups and broth. Meanwhile, the snacks business faced ongoing pressure, with Beekhuizen noting that "the pressure on snacking categories increased sequentially" due to both cautious consumer spending and heightened competition. Management also pointed to mixed outcomes across its snack brands, with Pepperidge Farm bakery and cookies showing positive momentum but core brands like Goldfish crackers requiring renewed marketing focus.
Looking ahead, management sees continued growth opportunities in meals and beverages, underpinned by consumer preference for affordable, home-cooked meals and a balanced portfolio spanning both mainstream and premium brands. Beekhuizen cited the need for "disciplined short-term execution" while investing in innovation and digital capabilities to support long-term value creation. However, the company expects a slower recovery for its snacks portfolio, planning to lean more into targeted marketing and price-pack architecture to reinvigorate brands like Goldfish. CFO Carrie Anderson flagged ongoing tariff-related uncertainties and a cautious approach to promotional activity, explaining, "we're working to minimize the overall impact, including strategic inventory management and supplier partnerships." Management expects overall earnings to be at the low end of guidance, citing persistent headwinds in snacks and evolving trade conditions.
Key Insights from Management’s Remarks
Management identified the surge in at-home meal preparation and a dynamic competitive environment in snacks as primary influences on the quarter’s results, while also outlining strategies to mitigate cost pressures and support brand growth.
- Meals and Beverages Strength: The division benefited from increased at-home cooking, with condensed soups and broth gaining share, particularly among millennials. The mac and cheese campaign drove the highest household penetration gain for condensed soups in four years.
- Mixed Snack Performance: Snack brands experienced varied results; Pepperidge Farm bakery and Milano cookies gained share through innovation, while Goldfish crackers and some pretzel brands faced declines due to category softness and lapsing prior-year promotions.
- Impact of Marketing Activations: Targeted marketing, such as limited-time offerings and brand-specific campaigns (e.g., Milano white chocolate launch), boosted engagement and share in select snack categories, suggesting a path for brand turnaround.
- Tariff and Cost Mitigation: Management highlighted actions to address emerging tariff impacts, including strategic inventory management, supplier partnerships, and product cost optimization. They cautioned that the full impact of tariffs remains uncertain, especially for products with international sourcing like Rao’s sauces.
- Operational Efficiency Initiatives: Integration of recent acquisitions and back-office digital upgrades, including the new Chief Digital and Technology Officer, are expected to drive future cost savings and improve execution across divisions.
Drivers of Future Performance
Campbell's outlook is driven by continued demand for value-focused home meals, targeted investments in brand innovation, and proactive efforts to manage cost pressures and trade-related risks.
- Home Cooking Demand Tailwind: Management believes that sustained consumer preference for home-cooked meals will benefit the meals and beverages portfolio. The company expects both mainstream and premium brands, such as condensed soups and Rao’s sauces, to help maintain volume and share gains.
- Snacks Recovery Strategy: The company plans to stabilize its snack business through increased marketing, innovation, and refined price-pack strategies. Management expects the snacks recovery to extend into next year, emphasizing the need for disciplined promotional activity and product relevancy to re-engage consumers.
- Tariff and Inflation Management: Campbell's is closely monitoring trade developments and inflationary pressures, with mitigation plans centered on inventory strategy, supplier negotiations, and selective pricing actions. Management warned that ongoing tariff risks, particularly for imported goods, could continue to pressure margins.
Catalysts in Upcoming Quarters
Looking ahead, StockStory analysts will be monitoring (1) the pace and sustainability of volume growth in meals and beverages as consumer habits evolve, (2) tangible progress in the recovery and repositioning of the snacks portfolio, and (3) the effectiveness of cost-saving and tariff mitigation strategies. The impact of digital transformation initiatives and new product launches will also be tracked for signs of improved execution and competitive advantage.
Campbell's currently trades at a forward P/E ratio of 11.2×. Should you double down or take your chips? See for yourself in our full research report (it’s free).
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