The Campbell's Company (CPB) shares climbed in Tuesday trading after the soup-and-snacks maker proved that beating Wall Street's expectations still counts for something, even when your sales are heading in the wrong direction.
The company reported first-quarter adjusted earnings of 77 cents per share, topping the consensus estimate of 73 cents. Revenue came in at $2.677 billion—down 3% year over year but still ahead of the Street's $2.657 billion forecast. Not too shabby for a business navigating softer demand.
Investors also got something else to chew on: a deal that deepens Campbell's relationship with La Regina, the Italian company that produces Rao's premium sauces, and confirmation that management stands by its full-year earnings outlook.
The Numbers Behind the Beat
Organic net sales, which strip out the noise from divestitures, fell 1% to $2.7 billion. The decline came primarily from lower volume and mix, with weakness spread across both major segments. Net sales dropped 4% in Meals & Beverages and 2% in Snacks.
The profit picture was less appetizing. Adjusted EBIT slid 11% to $383 million, dragged down by lower gross profit. Adjusted gross profit margin compressed 150 basis points to 29.9%, squeezed by cost inflation, supply chain headaches, and the gross impact of tariffs. Quarterly adjusted gross profit fell to $801 million from $871 million a year earlier.
On the bright side, Campbell's delivered roughly $15 million in cost savings during the quarter, bringing total savings to $160 million against its fiscal 2028 target of $375 million. Cash flow from operations held essentially flat at $224 million, compared to $225 million in the prior-year period.
Locking Down Rao's
The more intriguing headline is Campbell's move to acquire a 49% stake in La Regina for $286 million, paid in two installments. La Regina, founded in 1972 and headquartered in Scafati, Italy, has been producing Rao's tomato-based sauces since 1993. The company also operates a manufacturing plant in Alma, Georgia.
The deal is designed to cement Campbell's long-term partnership with La Regina while supporting product quality, innovation, and new product launches. Rao's has become a standout performer for Campbell's in the premium sauce category, so locking in the supply relationship makes strategic sense.
Campbell expects the transaction to close in the second half of fiscal 2026 and says it should be neutral to its reaffirmed fiscal 2026 adjusted earnings guidance.
Outlook Remains Steady
Management held firm on its fiscal 2026 guidance. The company expects organic net sales to range between a 1% decline and 1% growth, compared with fiscal 2025 organic sales of $9.98 billion.
Adjusted EBIT is projected to decline between 9% and 13% from fiscal 2025 levels of $1.46 billion. Adjusted earnings per share are forecast in a range of $2.40 to $2.55, representing a 12% to 18% decline from fiscal 2025 adjusted EPS of $2.91. That guidance sits right around the Street's $2.45 estimate.
CPB Price Action: CPB shares were up 1.03% at $30.35 during premarket trading on Tuesday.
