The Campbell’s Company has had a rough few years, and its top executives aren’t pretending otherwise. Valued at a market cap of $6.2 billion, Campbell’s stock is down more than 60% in the past decade.
The soup and snack maker behind Goldfish, Rao’s, and Prego recently confirmed a dividend cut, a larger cost-saving program, plant closures, and new pricing across much of its portfolio.
But in back-to-back appearances, during the company’s fourth-quarter earnings call and again at the Barclays Global Consumer Conference, CEO Mick Beekhuizen and CFO Todd Cunfer laid out why they made these calls, and what needs to happen next.
Why Campbell’s stock investors should care about the reset
Campbell’s (CPB) has faced a massive change in consumer behavior.
Snack categories that used to grow 4% to 5% a year are now growing closer to 1%. Shoppers are hunting for value amid elevated inflation and a challenging macro backdrop.
This shift has impacted brands such as Goldfish, Snyder’s of Hanover, and the company’s chips lineup.
Meanwhile, something interesting occurred on the other side of the business. Meals and beverages, including soup and Rao’s sauce, have benefited.
People began cooking more at home again, a trend the company calls semi-scratch cooking, meaning a meal made in under 30 minutes with five ingredients or less.
Campbell’s CEO explains the turnaround plan
Beekhuizen did not sugarcoat where things stand.
Fiscal 2027 guidance calls for organic sales to fall between 2% to 4%, with earnings per share down as much as 24%.
The first quarter (ending in October) is expected to be ugly, with no pricing benefit yet and snack volumes down sharply.
Still, the CEO says this reset is different from past promises.
Campbell’s rolled out a category model across the entire company this year, giving individual leaders full ownership of their businesses.
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The company also built a growth office focused on revenue growth management, a capability Beekhuizen admits the industry has used for years, but Campbell’s had been slow to build.
Here is a quick look at the new $500 million cost savings program running through fiscal 2030:
$150 million rolled over from the previous PEAK savings program, already locked in
$350 million in newly identified incremental savings
Headcount reductions, including an early retirement program, already completed
A major procurement initiative touching nearly every line on the income statement
Additional plant network optimization that will take longer to play out
“Whether it is a debt holder or an equity holder, being over 4x leverage is just not where we can be,” CFO Todd Cunfer said bluntly. “We need to get it down to three times as quickly as possible.”
Pricing and plant closures reshape the snack business
Campbell’s raised prices on roughly 60% of its portfolio, averaging around 4% to 5%. It is a meaningful move at a time when shoppers are already cost-conscious.
Cunfer explained the company built in a cautious assumption, expecting shoppers to pull back more than usual and competitors to sit on the sidelines rather than match the increases.
The team modeled a 1.5 elasticity assumption, higher than the one-to-one ratio that was typical in past years.
Snacks remain the toughest piece of the puzzle.
Related: Goldfish maker says it may cut some brands as snack sales weaken
Retail sales in that segment fell nearly 8% in the fourth quarter, with chips down more than 9%.
Two chip plants have already closed as part of the broader network cleanup.
Goldfish is the bright spot.
By narrowing its focus back to households with kids and leaning into a new national ad campaign along with a gluten-free launch, the brand has shown early signs of stabilizing.
Snack Factory is also refocusing, pulling back from the salty snacks aisle to concentrate on the deli aisle where the brand was born.
Campbell’s wrestles with slowing sales and sluggish consumer demand.NurPhoto / Getty Images
What comes next for Campbell’s stock
The company expects a rough first quarter, a better second quarter as pricing kicks in, and gross margin expansion by the second half of the year.
If that plays out, management believes fiscal 2028 becomes a year for investment and growth.
Campbell’s reduced its quarterly dividend by 36% from $0.39 per share to $0.25 per share. Despite the dividend cut, it offers a yield of almost 5%.
Given consensus data from TIKR.com, analysts forecast the soup maker to report a free cash flow of $678 million in fiscal 2027.
With annual dividend expense of $298 million, it has enough room to reduce debt over the next 12 months. Notably, free cash flow is projected to surpass $1.2 billion in fiscal 2031.
Beekhuizen summed up the mindset shift simply, saying the company is now facing reality, focused on speed and putting the consumer first, with accountability built into every level of the organization.
Investors watching Campbell’s stock will want to track one number above all else, according to Cunfer: gross margin.
If it stabilizes and expands by year-end, that is the clearest sign yet that this turnaround is more than just another promise.
Related: Top analysts reset Campbell’s stock amid major challenges