Campbell's Company Reports 9% Increase in Net Sales, Decline in Net Earnings for Q2 Fiscal 2025

The Campbell's Company reported a significant increase in financial performance for the second quarter of fiscal 2025, with net sales reaching $2.685 billion, a 9% increase from $2.456 billion in the same period last year. The growth was primarily driven by a 13-point contribution from the acquisition of Sovos Brands, which was completed on March 12, 2024. However, net earnings attributable to the company decreased to $173 million, or $0.58 per share, compared to $203 million, or $0.68 per share, in the prior-year quarter. The decline in earnings was attributed to higher marketing and selling expenses, increased interest expenses, and restructuring charges.

In terms of operational metrics, the Meals & Beverages segment saw a 21% increase in sales, largely due to the Sovos Brands acquisition, while the Snacks segment experienced a 6% decline in sales. The overall gross profit margin decreased to 30.5% from 31.6% in the previous year, primarily due to unfavorable net price realization and cost inflation, despite some benefits from supply chain productivity improvements. The company also reported a rise in marketing and selling expenses, which accounted for 9.5% of sales, up from 8.8% in the previous year.

The company has been actively restructuring its operations, incurring $5 million in restructuring charges during the quarter and a total of $11 million for the six-month period. These efforts are part of ongoing cost savings initiatives aimed at optimizing supply chain and manufacturing processes. Additionally, Campbell's has recognized impairment charges of $26 million related to certain trademarks in its Snacks segment, reflecting challenges in sales performance and market conditions.

Looking ahead, Campbell's management expressed cautious optimism regarding future performance, anticipating continued supply chain productivity and benefits from cost-saving initiatives to mitigate inflationary pressures. However, they acknowledged potential challenges from ongoing economic uncertainties, including the impact of tariffs and changing consumer demand. The company plans to focus on integrating Sovos Brands and optimizing its operations to drive growth and improve profitability in the coming quarters.