Campbell's (Campbell's (CPB)) stock took a hit Monday after the packaged food giant served up a mixed bag of third-quarter results. Earnings topped expectations, but revenue missed the mark as inflation, tariffs, and weaker demand for snacks and soups weighed on performance.

Adjusted earnings came in at 50 cents a share, beating the Wall Street estimate of 48 cents. But revenue fell 4% year over year to $2.366 billion, missing analysts' expectations of $2.381 billion. The company blamed lower volumes and an unfavorable product mix, which more than offset any pricing gains.

Margins took a beating. Adjusted gross profit dropped 12% to $656 million, and the adjusted gross margin narrowed by 240 basis points to 27.7%. Campbell's pointed to inflationary pressures, tariff-related costs, and broader supply chain expenses. Adjusted EBIT fell 24% to $274 million, as lower gross profit weighed on results.

For the first nine months of fiscal 2026, operating cash flow totaled $839 million, with capital expenditures of $297 million. The company ended the quarter with $402 million in cash and cash equivalents and returned $380 million to shareholders year to date, primarily through dividends.

Campbell's generated about $20 million in savings during the quarter, bringing cumulative savings under its fiscal 2028 cost-reduction program to $200 million. Management is targeting $375 million in total savings and expects those efforts to help offset tariff and inflationary pressures.

The Meals & Beverages segment posted a 4% decline in reported and organic net sales, driven by a 5% unfavorable volume and mix impact. U.S. soup sales fell 8%, primarily because of weakness in the condensed and ready-to-serve categories. Operating earnings for the segment declined 16% as tariffs, cost inflation, supply chain pressures, and weaker volume reduced profitability.

The Snacks business also reported a 4% decline in reported and organic sales, reflecting a 6% drop in volume and mix. The company pointed to weakness in its salty snacks portfolio, including crackers and fresh bakery products, as well as lower third-party and contract manufacturing sales. Snacks' operating earnings fell 32% because of higher input costs, tariffs, and an unfavorable sales mix.

Looking ahead, Campbell's reaffirmed its fiscal 2026 adjusted earnings outlook of $2.15 to $2.25 a share, compared with the Wall Street consensus estimate of $2.17. Management expects a tariff refund benefit of 3 cents to 4 cents a share in the fourth quarter, although it said the gain is likely to be fully offset by higher fuel costs. The company also indicated that the lower end of its annual sales guidance range is the more realistic outcome.

But the real headline came from the earnings call. CFO Todd Cunfer said, "The one thing that is looking more and more clear every day is that the first half inflation will be pretty high," adding that lower oil prices would take time to flow through to commodities such as fertilizer and aluminum, as well as logistics costs. He also noted that even if the conflict ended immediately, it would take time for those input costs to normalize, reinforcing the view that Campbell's expects elevated inflation to persist into the first half of fiscal 2027.

Management is pursuing additional efficiency measures, including a targeted $100 million reduction in selling, general, and administrative expenses and an early retirement program. The company also said it has no current plans to increase its dividend and is evaluating hybrid debt instruments to support its credit profile.

Within the snacks business, Campbell's is streamlining lower-priority products and focusing investment on key brands, including Goldfish, while seeking to improve cost efficiency and trade spending returns. The company also sees organic growth opportunities in meals and beverages, supported by continued demand for at-home food consumption and new product innovation.

Campbell's shares were down 1.68% at $21.31 at the time of publication on Monday.