Campbell’s: Organic Sales Return to Growth As Consumers Cook at Home More, But Snacks Struggle

The Campbell’s Company (f.k.a. The Campbell’s Soup Company) managed to grow organic net sales in Q3 after three straight quarters of declines, but its snack segment continues to struggle as cash-strapped consumers are “increasingly intentional” about spending in the category.

In the quarter ending April 27, the Goldfish and Snyder’s of Hanover producer saw net sales climb 4% to $2.5 billion. On an organic basis, sales rose 1%. The “solid” Q3 results were primarily attributable to improved consumption across all consumer income groups in Meals & Beverages, according to CEO Mick Beekhuizen.

“Consumers are cooking at home at the highest levels since early 2020 and turning to our brands for value, quality and convenience. Our overall performance reflects our strong execution and disciplined cost management in what remains a dynamic operating environment,” said Beekhuizen in a prepared statement.

On a segment-specific basis, the company’s Meals & Beverages division saw net sales jump 15%, mainly fueled by the benefit of the Sovos Brands acquisition. Excluding the impact of the acquisition and the noosa divestiture, organic net sales grew 6%.

Consumers are favoring ingredients that help stretch tighter food budgets, providing a tailwind for the segment, including gains in cooking soups, broths and Italian sauces.

Campbell’s broth business has continued to be a bright spot, “significantly” outpacing category consumption and growing dollar share by nearly three points in the quarter, per Beekhuizen. The Swanson brand saw strong consumption and volume growth and has now gained or held millennial households for seven consecutive quarters.

Meanwhile, net sales in Snacks slid 8%. Excluding the impact of the Pop Secret divestiture – which is expected to dilute Campbell’s FY25 EPS by approximately $0.04 – organic net sales dropped 5%, driven by declines in Goldfish crackers, third-party partner and contract brands, Snyder’s of Hanover pretzels, Late July Snacks and Lance Sandwich Crackers. The company’s overall snack brand consumption declined 3% in the quarter,

Like a number of other CPG brands, Campbell’s is turning to price pack architecture (PPA) as a tool for reinvigorating consumer demand amid a “fluid” operating environment. Beyond promotional activity during key periods like Easter, that includes ensuring the company’s brands have “the right starting price point in the market” with multipack initiatives.

“I’m not looking as much at increased promotional activity from a dollar perspective. It’s more about making sure that we allocate the promotional dollars properly and, on top of it, we continue to evolve around PPA,” Beekhuizen told analysts and shareholders during this morning’s earnings call, highlighting the company’s 2.5 oz. grab-and-go Goldfish bags.

He continued, “While value is important, consumers favor better-for-you segments and are willing to selectively splurge when the benefits are clearly worth it, as evidenced by the momentum of some of our recent innovation launches,” noting that three of the company’s eight “leadership” snack brands grew or held category share in Q3.

Gross profit slipped from $732 million to $728 million. Adjusted gross profit margin decreased 110 basis points to 30.1%, primarily due to cost inflation and other supply chain costs, unfavorable net price realization and the impact of the Sovos Brands acquisition, partially offset by supply chain productivity improvements.

Based on the earnings report, Campbell’s is reaffirming its fiscal 2025 guidance with adjusted EPS expected to be at the low end of the range, excluding the impact of tariffs. Adjusted EBIT and adjusted EPS are expected to be at the low end of the guidance range due to the slower-than-anticipated recovery in Snacks.

“We’re still focused on all of the snacks margin-building blocks, including DSD warehouse and route optimization, as well as mix improvement. It’s also important that we remain competitive in the marketplace and support our brands for long-term value, so we’re trying to make sure we balance both,” said Carrie Anderson, CFO, during this morning’s call.