Campbell’s Company (CPB) outlined its fiscal 2027 turnaround strategy at the Barclays Global Consumer Conference, focusing on pricing adjustments, cost reductions and margin expansion to stabilize earnings amid soft consumer demand. The company expects organic sales to decline by 2% to 4%, with earnings before interest and taxes (EBIT) falling 7% to 12% and earnings per share (EPS) dropping 17% to 24%. However, it projects gross margin expansion in the second half of the year and a potential EPS turnaround in the fourth quarter, despite a challenging first quarter. Stock traded at $21.84 on April 10, up 0.34% from the prior close of $21.76, though it had fallen 3.39% from $21.98 in prior-day after-hours trading, reflecting broader volatility in the sector.
The turnaround hinges on a $500 million cost-cutting program running through fiscal 2030, including $150 million from an existing program and $350 million in new savings. Capital expenditures are expected to drop to $300 million in fiscal 2027 from over $400 million historically, while working capital targets at least $100 million in annual free cash flow. Net leverage is currently at 4.3 times, with a three-to-four-year goal of reducing it to 3 times.
Pricing adjustments will account for about 2.5% to 3% increases across 60% of Campbell’s portfolio, assuming a 1.5 average volume elasticity. The company cited raw material and packaging inflation at 5% to 6% and double-digit logistics costs. In the snacks segment, fourth-quarter organic sales were down 6%, consumption fell 5%, and retail sales dropped nearly 8%, with chips declining over 9%. Snack categories that previously grew 4% to 5% are now expanding at closer to 1%.
Key brands show mixed but cautious signs of stabilization. Goldfish, targeting core households with children, is stabilizing, while Snack Factory is repositioning from salty to deli categories. Snyder’s of Hanover is benefiting from momentum in unflavored pretzels, supported by America250 marketing. In the meals and beverages segment, Rao’s has grown at 5% annually over the past four years, with household penetration rising 300 basis points since acquisition. The brand’s semi-scratch cooking concept—meals made in under 30 minutes with five ingredients or fewer—has driven high single-digit sauce consumption and double-digit growth in soup in glass. Frozen pizza prices were cut to $9.99.
Management emphasized execution, marketing and innovation as critical to consumer engagement. President and CEO Mick Beekhuizen noted that while no single solution will solve the turnaround, sustained focus on everyday execution and brand support will be key. CFO Todd Cunfer highlighted gross margin stabilization as a priority, arguing that margin expansion in fiscal 2027 would set the stage for top-line growth in fiscal 2028.
The strategy reflects broader challenges in the consumer staples sector, where inflationary pressures and shifting consumer behavior have pressured margins and sales growth. Campbell’s approach balances cost discipline with selective pricing to preserve profitability amid a softening market.
