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Campbell’s Stock Fell on Continued Sales Decline. It’s Making a Bigger Bet on Rao’s.

Dec 09, 2025 12:31:00 -0500 by Evie Liu | #Staples #Earnings Report

Campbell’s has been scrambling to meet shifting consumer preferences and mitigate tariff impact on imported cans. (David Paul Morris/Bloomberg)

Key Points

Campbell’s stock tumbled on Tuesday after the company—known for its canned soup, food staples, and snacks—posted another quarter of weak sales and squeezed margins.

Like many of its peers, Campbell’s has been scrambling to meet shifting consumer preferences and mitigate tariff impact on imported cans.

For the first quarter of fiscal 2026 ended in November, Campbell’s net sales decreased 3% from a year ago to $2.68 billion. Part of the decline was due to divestitures of brands such as Noosa yogurt. Excluding the impact, organic sales decreased 1% from a year ago.

Adjusted earnings fell by 13% to 77 cents per share from 85 cents a year ago, thanks to higher tariffs, cost inflation, and other supply-chain expenses. Still, both sales and earnings numbers beat Wall Street expectations.

The stock tumbled 4% in Tuesday trading, approaching its lowest close since July 10, 2009, according to Dow Jones Market Data. Year to date, shares have lost more than 31% in value.

Organic sales for Campbell’s meals and beverages business declined 2% from a year ago on the back of falling volume in ready-to-serve soups, SpaghettiOs, Pace Mexican sauces, and V8 beverages.

Still, Campbell’s is optimistic about the segment thanks to strength in its “leadership brands” of condensed cooking soups, broth, and Italian sauces.

“Our leadership brands benefited from consumers’ ongoing cooking at home behaviors and the growing demand for elevated meal experiences,” said CEO Mick Beekhuizen on the earnings call, noting that the latest quarter marks the ninth consecutive quarter that the group held or grew its market share.

Rao’s, an Italian specialty-foods brand that Campbell’s acquired in 2024, has been a major growth engine. During the latest quarter, Rao’s delivered low single-digit dollar consumption growth, outpacing rivals in the Italian sauce category, according to Campbell’s.

In the latest quarter, Campbell’s agreed to acquire a 49% interest in Rao’s Italy-based producer, La Regina. The expanded partnership should help should help ensure that Rao’s products retain their high quality while accelerating innovation and new-product development, said the firm.

Organic sales for Campbell’s snacks business also declined 1% year over year. Still, the company says its brands “remain highly relevant” and well positioned for premiumization and flavor exploration. Consumers are still snacking, said Beekhuizen, but how they are snacking is evolving.

“We are taking steps to further improve the health and wellness benefits of our snacks leadership brands, for example, by providing consumers with avocado oil in our chips portfolio, and we have an exciting innovation pipeline for both the short and long term,” he adds.

Campbell’s said it’s also “making great progress” on cost savings and productivity initiatives to help offset inflation and continue to invest in its brands. The company aims to deliver $375 million in cost savings by fiscal 2028.

In the earnings report, Campbell’s reaffirmed its full-year fiscal 2026 guidance, expecting organic sales to be between a 1% decline and 1% growth. Adjusted earnings per share are expected to decline 12% to 18% from fiscal 2025 to a range between $2.40 and $2.55.

“In fiscal 2026, we continue to expect a significant impact from tariffs,” said Beekhuizen, who expects tariffs to make up about 4% of the cost of Campbell’s products. About 60% of the tariff cost is related to steel and aluminum tariffs, which have made canned food more expensive, he said.

Write to Evie Liu at evie.liu@barrons.com