The Campbell’s Company reported third-quarter fiscal 2026 results that surpassed earnings expectations but fell short on revenue targets as inflation, tariffs, and weaker demand impacted performance. Adjusted earnings were 50 cents a share, exceeding the Wall Street estimate of 48 cents, while revenue declined 4% year over year to $2.366 billion against analysts' expectations of $2.381 billion. The company attributed the revenue decline to lower volumes and an unfavorable product mix that outweighed pricing gains.

Earnings and Margins Under Pressure

Adjusted gross profit fell 12% from a year earlier to $656 million, while adjusted gross margin narrowed 240 basis points to 27.7%. Campbell's cited inflationary pressures, tariff-related costs, and broader supply chain expenses as primary factors. Adjusted EBIT dropped 24% to $274 million as the decline in gross profit weighed on results.

Segment Performance

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 due to weakness in 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 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% due to higher input costs, tariffs, and an unfavorable sales mix.

Financial Position and Outlook

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

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, though this gain is likely to be fully offset by higher fuel costs. The company indicated that the lower end of its annual sales guidance range is the more realistic outcome.

Cost Savings and Future Inflation

The company 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 to help offset tariff and inflationary pressures.

Looking ahead, Campbell's said fiscal 2027 could face inflationary headwinds of about 5% to 6%, driven by higher oil prices and other cost pressures. During the earnings call, CFO Todd Cunfer stated that the first half of fiscal 2027 will experience "pretty high" inflation, noting that lower oil prices would take time to flow through to commodities such as fertilizer and aluminum, as well as logistics costs. Management plans to offset these challenges through productivity gains, cost-cutting initiatives, and selective pricing actions.