Campbell's Q3 Sales Edge Higher

Campbell's (NASDAQ:CPB) reported fiscal 2025 third-quarter results on June 2, 2025, posting 1% organic net sales growth, adjusted EBIT increased 2%, and adjusted EPS of $0.73 (down 3% year over year), with full-year adjusted EPS now expected at the low end of prior guidance. Persistent softness in snacks tempered strong meals and beverages performance, as management confirmed accelerated cost savings initiatives and detailed precise tariff impact estimates.

Meals and Beverages Gain Share as At-Home Cooking Remains Elevated

The meals and beverages segment achieved 6% organic net sales growth and increased consumption by 2%, extending its streak to six consecutive quarters of positive in-market consumption for meals and beverages. Household penetration gains in condensed cooking soups were particularly strong among millennial consumers, with mac and cheese marketing resulted in approximately 1 million new households added, the largest four-year quarterly gain for this subcategory.

"This activation helped drive the eleventh consecutive quarter of condensed cooking soup share growth and added approximately one million households to Campbell's condensed cooking portfolio, the highest household penetration gains condensed in any quarter over the past four years. More than half of these new buyers were millennials, displaying the brand's growing popularity with this generation."
— Mick Beekhuizen, Chief Executive Officer

Penetrating younger demographics in the core soup business demonstrates the durability of Campbell’s cash-generative brand portfolio, reinforcing the long-term thesis around relevance to evolving consumer behaviors even amid macro uncertainty.

Snacks Segment Lagging Recovery; Strategic Focus on Innovation and Price-Pack Architecture

The snacks division's organic net sales declined by 5%, with snacks leadership brand consumption declining by 3% as two-thirds of the decline tracked to category-wide contraction and one-third to company-specific execution. Notably, Pepperidge Farm bakery delivered nine-quarter highs in both volume and dollar share growth, while Goldfish faced headwinds from cycling last year’s new product launch and core declines.

"If you look at our in-market consumption, you saw that in Q2, we were down minus 1%. In Q3, we're down minus 3%. About two-thirds of that is driven by the worsening of the aggregate categories, and about one-third of that is driven by our in-market performance."
— Mick Beekhuizen, Chief Executive Officer

Recovery prospects for snacks are now delayed into fiscal 2026, and management’s sharpening of price-point strategies, multipack offerings, and targeted innovation underscores the urgency in preserving share and margin while avoiding excessive reliance on promotions.

Disciplined Cost Controls, Accretive Acquisition Integration, and Tariff Mitigation

The company realized approximately $110 million in cost savings toward its $250 million multi-year target, with SOVOS acquisition integration unlocking additional back-office efficiencies after transition to a unified ERP. Despite a 110 basis point adjusted gross profit margin contraction (mainly from pricing investment), cost disciplines enabled a 2% adjusted EBIT gain, and acquisition synergies proved accretive to adjusted EPS.

"As of the end of the third quarter, we delivered approximately $110 million of total savings under the $250 million cost savings program announced at our Investor Day in September of 2024, of which approximately 30% were realized in cost. ... As of the beginning of the fourth quarter, we have now transitioned the Sobeys business into our Campbell Soup Company ERP system, which will unlock additional back-office savings in IT, finance, and order management into fiscal 2026."
— Carrie Anderson, Chief Financial Officer

These multi-pronged cost initiatives, combined with resilience to initial tariff implementations (estimated at a manageable $0.03–$0.05 fiscal 2025 EPS headwind), enhance operational flexibility and support continued reinvestment in brand-building and innovation

Looking Ahead

Management reaffirmed FY2025 guidance (excluding tariffs) but now expects adjusted EPS at the low end of the range, with meals and beverages facing around three percentage points of shipment-related headwinds and snacks full-year operating margin projected at 13%. The company raised its FY2025 cost savings target to $130 million (from $120 million). It will benefit from a 53rd week (~$0.05 adjusted EPS), and it projects capital expenditures at approximately 4.5% of net sales. Tariff-related impact to adjusted EPS is estimated at $0.03–$0.05 and is not annualizable due to ongoing mitigation and trade unpredictability; no explicit FY2026 financial guidance was provided.

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This article was created using Large Language Models (LLMs) based on The Motley Fool's insights and investing approach. It has been reviewed by our AI quality control systems. Since LLMs cannot (currently) own stocks, it has no positions in any of the stocks mentioned. The Motley Fool recommends Campbell's. The Motley Fool has a disclosure policy.