The Campbell’s Company is closing facilities, cutting jobs, adjusting prices, tightening its assortment and reducing its quarterly dividend as part of a multi-prong effort to improve performance after another quarter of “unacceptable” results, executives revealed yesterday.
The company’s net sales fell 8% to $2.1 billion and gross profit declined 17% to $583 million during the company’s fourth quarter ending Aug. 2 due in part to lingering inflation pressuring both the company’s margins and consumer spending, the executives said Sept. 3 during Campbell’s quarterly earnings call.
A 12% drop in snack sales and 8% decline in US soup sales in the quarter also contributed to the financial woes of the company, which is known for its eponymous condensed canned soups and Goldfish crackers among other iconic meals, beverages and snacks.
“Make no mistake, our results remain unacceptable,” said Mick Beekhuizen, who took the helm as CEO 18 months ago.
“But,” he added in prepared remarks, “instead of waiting for the environment to improve around us, we are addressing reality head-on.”
He acknowledged many of the initiatives Campbell’s Company is undertaking “are difficult but necessary,” and while “they will not improve performance overnight … they are designed to restore growth, rebuild margins, reduce leverage and position Campbell’s for sustainable long-term value creation.”
The key initiatives include strengthening leadership and a streamlined operating model; getting closer to the consumer in all aspects of the business; refocusing how the company builds and supports brands; an enterprise-wide savings program; and strengthening the balance sheet.
Campbell’s targets $500M in cost cuts to fund turnaround
Fundamental to funding Campbell’s multi-prong transformation plan is an enterprise-wide program targeting $500 million in cost reductions by fiscal 2030, designed to improve margins and cash flow to invest in the company’s brands
“With this program, we are focused on increasing speed and accountability, and improving our margins and cash flow,” Beekhuizen said.
The initiative is separate from Campbell’s annual productivity initiatives, “which will continue to target an average of approximately 3% of cost of products sold,” added CFO Todd Cunfer.
He explained that several components of the savings program already are underway.
Among them are the closures of two snack plants and a facility making soups and beverages. The closure of a chip plant in Jeffersonville, Ind., resulted in the layoffs of 111 employees in August and this month. Ending operations at a small Cape Cod and Kettle Brand potato chip plant in Hyannis, Mass., will affect 49 employees, and the final closure in July of a Tualatin, Ore., facility that makes Pacific Foods organic soups, broths and plant-based beverages impacted 330 workers.
“Through a voluntary early-retirement program and involuntary reductions, we reduced our salaried workforce by approximately 13%,” Cunfer said, adding “these actions are designed to improve speed and accountability while supporting our margins and cash flow.”
The savings plan also includes “targeted net price realization,” which Cunfer acknowledged may pressure volumes in the near term, but which were necessary “to protect our margins and preserve our ability to invest in our brands.”
Beekhuizen explained that with cost pressures expected to accelerate in 2027, the company will “selectively” implement commodity-driven pricing actions. He added that a strengthened enterprise revenue growth management team will also bring “greater rigor to pricing, promotions, price-pack architecture and how we deliver the right value to consumers.”
In addition, the company is reducing net working capital and prioritizing high-return capital projects, as well as reducing by 36% its quarterly dividend to 25 cents per share.
Campbell’s doubles down on strongest brands
While the company is saving where it can, it also is investing where necessary – including increased media paired with a change in how it approaches marketing.
Historically, the company has taken a “balanced approach” to marketing across its portfolio, but now will direct a majority of the marketing budget toward its “best opportunities,” said Beekhuizen.
“In fiscal 2027, we have national advertising campaigns planned for Rao’s, Goldfish and Pepperidge Farm, as well as a robust omnichannel and influencer-led media plan to drive trial of innovation, notably across two new platforms under the Campbell’s brand,” he explained.
For example, a new advertising campaign for Rao’s will highlight “the time we take to slow simmer our sauces and the value of making time for shared meals with friends and loved ones,” while Goldfish activations will position the brand as a “wholesome, fun snack for families with kids” through back-to-school activities and family-oriented offerings, such as multipacks, and a new marketing campaign reinforcing the fish shaped crackers as “the snack that smiles back,” Beekhuizen said.
“We are also further accelerating our shift toward digital, responding to how consumers are discovering and engaging with brands,” he added. “This includes expanded use of social, influencer and e-commerce channels, as well as newer AI-enabled platforms, which together will represent approximately 85% of our working media budget.”
Can new products reignite growth?
Campbell’s also is investing strategically in innovation and renovation.
For example, this fall the company will launch three new Goldfish options – protein, whole grain and gluten-free.
Under its Pepperidge Farm brand, the company launched a limited-edition Maggie’s Apple Pie cookie and “will build on recent success with on-trend innovation and a national media campaign highlighting the rich flavor and indulgence of” cookies under the brand, said Beekhuizen.
As for Rao’s and Pacific, Campbell’s sees significant potential to “bring new relevance to the broader category by meeting consumer demand for premium and better-for-you offerings,” he said.
This will include planned launches in fiscal 2027 of Pacific ramen broth, Campbell’s Condensed sauces and a new line of better-for-you, clean-label Campbell’s ready-to-serve soups made from bone broth and high-quality ingredients and functional benefits, including 20 grams of protein and an average of 8 grams of fiber, he said.
A difficult year ahead
Even with the savings and growth initiatives underway, Campbell’s expects fiscal 2027 to be another difficult year.
The company projects net sales will decline 2% to 4% and adjusted EPS will fall 17% to 24% to $1.65 to $1.80, as 5% to 6% inflation in raw materials and packaging and double-digit logistics inflation weigh on results.
The outlook underscores the challenge facing Beekhuizen as he seeks to turn around the company: Campbell’s is accepting significant near-term disruption, including plant closures, job cuts, higher prices and a sharply lower dividend in an effort to rebuild margins and returning its brands to sustainable growth.
For now, however, the company is asking investors to endure another year of declining sales and earnings while it lays the groundwork for that recovery.