CPB · Q2 2026 Earnings

Bearish

Campbell's Company (The)

Reported March 11, 2026

30-second summary

Organic sales fell 3% with Snacks down 6% organic and adjusted EPS at $0.51, and management took the hatchet to the FY2026 framework that was reaffirmed just 90 days ago: adjusted EPS cut to $2.15–$2.25 (from $2.40–$2.55, ~11% midpoint cut), EBIT growth guide deepened to -20% to -17% (from -13% to -9%), and organic sales pushed entirely negative at (2)% to (1)% (from (1)% to +1%). The Q1 FY2026 "reaffirmation as conviction" posture is gone — the Snacks deterioration that was supposed to narrow toward zero went the other direction, and management is now spending into "incremental trade investments" to defend share.

Headline numbers

EPS

Q2 FY2026

$0.51

Revenue

Q2 FY2026

$2.56B

-5.0% YoY

Gross margin

Q2 FY2026

28.0%

Operating margin

Q2 FY2026

10.6%

Key financials

Q2 FY2026

Metric	Q2 FY2026	YoY	Q1 FY2026	QoQ
Revenue	$2.56B	-5.0%	$2.68B	-4.2%
EPS	$0.51	—	$0.77	-33.8%
Gross margin	28.0%	—	29.6%	-160bps
Operating margin	10.6%	—	12.6%	-200bps

Guidance

Campbell Soup lowered full-year FY2026 guidance across EPS, organic sales growth, and EBIT growth, citing near-term Snacks business softness and incremental trade investments.

Guidance is issued for both next quarter and the full year. Both may appear below.

Changes to prior guidance

Metric	Period	Prior guide	New guide	Δ	Result
Adjusted EPS	FY 2026	$2.40 to $2.55	$2.15 to $2.25	-$0.25 to -$0.30 (midpoint -$0.28)	Lowered
Organic Net Sales Growth	FY 2026	(1)% to +1%	(2)% to (1)%	-1 to 0 percentage points (shifted range down by 1pt at low end)	Lowered
Adjusted EBIT Growth	FY 2026	(13)% to (9)%	(20)% to (17)%	-7 to -8 percentage points (range shifted down significantly)	Lowered

Segment performance

Q2 FY2026

Segment	Q2 FY2026	YoY
Meals & Beverages	$1.65B	-4.0%
Snacks	$0.914B	-6.0%
Meals & Beverages Organic Growth	-2%	—
Snacks Organic Growth	-6%	—

Platform metrics

Q2 FY2026

Segment	Q2 FY2026
Organic Net Sales Growth	-3%
Cost Savings Delivered	$20 million
Rao's Trailing Twelve-Month Sales	>$1 billion

Profitability

Q2 FY2026

Segment	Q2 FY2026
Adjusted EBIT	$282 million
Adjusted Gross Profit Margin	27.7%
Operating Cash Flow (YTD)	$740 million

Management tone

Q1 FY2026 disciplined hold → Q2 FY2026 capitulation

No earnings call transcript prepared remarks were available; tone read draws on press-release language and Q&A excerpts.

The reaffirmation posture broke. Ninety days ago management held every FY2026 line despite Q1 FY2026 organic at the low end of the range, betting on second-half stabilization and cost-savings delivery. This quarter the language is "more cautious view for the balance of the year," "given our first half results and the current operating environment," and "lowering our full-year outlook" — a complete reversal of the Q1 FY2026 framing that the quarter was "in line with expectations." The asymmetry between near-term capitulation and preserved long-term language ("brand portfolio fundamentals remain sound") is exactly the shape of a management team that has decided defending the in-year number is no longer worth the credibility cost.

Cost savings stopped being the story; trade investment became it. The Q1 FY2026 reaffirmation leaned on the $375M cost-savings program as the lever to defend EPS against tariffs. This quarter the cut is attributed partly to "select incremental trade investments" — meaning the savings program is no longer sufficient to offset what's happening on the topline and at the price point. From Q&A: marketing spend "will be up YoY despite reallocation" and trade spend is rising selectively where price gaps exist. The Q1 FY2026 framing was "productivity defends the margin"; the Q2 FY2026 framing is "spending defends the share."

The Snacks "stabilization" thesis inverted in one quarter. Snacks organic went from -1% in Q1 FY2026 to -6% in Q2 FY2026, with management in Q&A attributing 75% of the segment margin collapse to revenue deleverage on the 6% decline. The explanation — fresh bakery execution issues plus competitive pressure in salty chips requiring promotional response — is operationally specific but strategically uncomfortable: it confirms the recovery is now contingent on competitive market dynamics the company doesn't control, not just internal execution.

Q&A highlights

Andrew Lazar · Barclays

What are the key areas of focus for snacks (goldfish, fresh, salty) and what is the plan for progress in H2? Specifically on salty, what is the competitive response strategy (pricing, promo, bonus packs) and magnitude? Why was SNAC segment margin only 7% and should that be expected for next few quarters?

Management outlined three focus areas: goldfish momentum maintenance, fresh bakery execution improvements (Q3 headwinds, Q4 normalization), and salty competitiveness via pricing, daily execution, and innovation. For salty chips specifically, the approach is surgical promotional activity focused on key moments and channels, with potential selective list price adjustments. Margin deterioration was driven by bakery performance (25%) and 6% revenue decline causing 390 bps deleverage; Q3 will see modest improvement but Q4 should show significant recovery due to bakery stabilization, lower marketing spend, and goldfish mix benefit.

SNAC margin down 390 basis points in Q2~25% of margin decline from bakery, ~75% from deleverageSnacks expected to be down ~4% in H2, balanced between Q3 and Q4Goldfish highest margin product in snacks portfolio

Peter Galbo · Bank of America

Why is promotional activity the right tactic for salty chips when competitor is shifting to permanent everyday price reductions? Can you clarify the EPS cadence for H2 (Q3 similar to Q2, normal step down in Q4 to hit 90 cents)?

Management explained the surgical promotional approach preserves brand positioning (Kettle/Cape brands have right to win in premium subcategories) and maintains competitive stance in key channels/moments. However, acknowledged that if list price gaps become too large, selective permanent adjustments may be necessary—this is not just promotional-only solution. On EPS cadence: Q3 expected similar to Q2, Q4 shows normal improvement to deliver 90 cents for full H2.

Back half EPS guidance: ~45 cents Q3, ~45 cents Q3, step down to deliver 90 cents total H2Promotional strategy is primary but selective list price adjustments possible if gaps too largeCape and Kettle brands positioned in premium kettle subcategory

Megan Klopp · Morgan Stanley

Can you unpack Q3 to Q4 margin progression expectations by segment, particularly given that Q4 is typically lower margin? What drives confidence in margin improvement sequentially from Q3 to Q4?

Management identified four drivers of Q4 margin improvement: (1) lapping Sovos ERP conversion that pulled volume into Q3 last year (volume returns to Q4 this year), (2) snacks margin stabilization (not back to normal but improved), (3) tariff comparison benefits (will lap year-over-year headwinds from Q4 prior year), and (4) lower advertising spend YoY. Snacks expected down ~4% for full H2, fairly balanced Q3/Q4 with slight Q4 improvement. Margins will stabilize and improve but not return to historical levels this year.

Snacks expected down ~4% for H2Q4 margin drivers: Sovos ERP lap, snacks stabilization, tariff laps, lower ad spend YoYTariffs will stop being year-over-year headwind in Q4

Michael Lavery · Piper Sandler

Why reallocate marketing to promotional spend rather than doing both? Is this just a leverage/debt constraint or is there no room to increase overall marketing? How are you balancing marketing investment needs against pricing/promotional requirements?

Management stated marketing spend will be up YoY despite reallocation; the shift reflects market conditions requiring competitive promotional response on price gaps (broth, chips). Approach is balanced and selective: continue supporting core brands and key growth drivers (Rails in M&B, Goldfish in snacks) with marketing while strategically increasing trade spend where price gaps exist. This is not a dramatic trade philosophy shift but prudent competitive response given current market dynamics.

Marketing spend will be up year-over-year in absolute termsReallocation to promo will have incremental P&L hitSelective support: Rails and Goldfish continue receiving marketing investment

Max Gumport · BNP Paribas

Snacks recovery has been ongoing for years with no volume growth. At what point do you reset normalized growth expectations? What gives confidence that snacks can still grow at levels discussed at past investor days?

Management provided detailed brand-by-brand rationale: (1) Goldfish—well-positioned premium/better-for-you brand in growing subcategory with sequential momentum; (2) Bakery/cookies—growing 4 quarters with Milano/Chessman innovation in growing cookie subcategory; (3) Fresh bakery—execution challenges being fixed, should return to 'flattish' at minimum; (4) Salty/pretzels—participating in growing pretzel subcategory with Snack Factory/Snyder's momentum; (5) Salty/chips—Cape/Cattle chips in growing kettle chip subcategory but facing competitive pressure; (6) Late July—premium brand growing and well-positioned. Confidence based on brand positioning, subcategory participation, and consumer trend alignment (premium, better-for-you, flavor exploration).

Goldfish in growing subcategory with sequential improvement momentumCookies growing 4 quarters with innovation driving growth in flat categoryPretzel subcategory growing; Snack Factory and Snyder's brands participatingKettle chip subcategory growing; competitive pressure limiting share gains

Answers to last quarter's watch list

Q2 FY2026 organic by segment — Snacks organic worsened from -1% to -6% (reversing the narrowing trend), and M&B organic stayed at -2% — the second consecutive quarter negative, exactly the trigger flagged. Both segments deteriorated relative to the implied path.

Resolved negatively

Cost savings Q2 FY2026 in-period delivery — $20M in Q2 FY2026 vs. $15M in Q1 FY2026, with cumulative program-to-date savings of $180M against the $375M fiscal 2028 target (~$195M remaining). The acceleration is real but not large enough to bridge the topline shortfall, which is why management cut.

Continue monitoring

Adjusted gross margin direction — 27.7% in Q2 FY2026 vs. 30.4% prior-year Q2 — 270 bps of YoY compression, materially worse than "stabilizing in the high-29s." This is where the trade investment and tariff/cost inflation are showing up.

Resolved negatively

Any narrowing of the FY2026 ranges — Not narrowed — cut outright across all three metrics (EPS, organic sales, EBIT). The Q1 FY2026 reaffirmation looks in retrospect like the soft signal it was.

Resolved negatively

Marketing spend disclosure — Management confirmed in Q&A that marketing spend will be up YoY in absolute terms but is being partially reallocated to trade. Per-quarter disclosure of marketing intensity remains absent from the press release, and the implicit message — trade is now doing the volume work — means the original marketing-as-topline-lever framing is effectively retired.

Resolved negatively

What to watch into next quarter

Q3 FY2026 EPS print vs. the ~$0.51 implied — Management telegraphed Q3 FY2026 EPS similar to Q2 FY2026 ($0.51), with Q4 FY2026 implied at ~$0.39 to deliver $0.90 H2 total. Any Q3 FY2026 print below $0.51 puts the new $2.15–$2.25 FY range at immediate risk on the Q3 FY2026 call.

Snacks organic vs. the -4% H2 commitment — Management committed to Snacks down ~4% in H2 balanced across Q3/Q4 FY2026. A third consecutive quarter of Snacks organic worse than -4% would force a portfolio question and likely a second guide cut.

Whether "selective list price adjustments" actually get taken in salty chips — Management acknowledged in Q&A this may be necessary if competitive price gaps widen. Permanent list price cuts (vs. surgical promo) would meaningfully change the FY2026 gross margin trajectory below the already-cut guide.

Adjusted gross margin floor — 27.7% in Q2 FY2026 is well below anything disclosed in recent quarters. Watch whether Q3 FY2026 holds at the high-27s/low-28s or compresses further; further compression means trade spend is escalating beyond the "select incremental" framing.

Cost savings cumulative-to-date through Q3 FY2026 — Program-to-date is $180M of $375M with ~$195M remaining to the fiscal 2028 target. Q3 FY2026 needs to show a meaningful in-period step-up to keep the program on a credible glide path.

M&B organic — Three consecutive quarters negative would shift the conversation from "Snacks is the problem" to "the whole portfolio is contracting" — a different valuation argument entirely.

Sources

Campbell's Company Q2 FY2026 press release (Exhibit 99.1, Form 8-K): https://www.sec.gov/Archives/edgar/data/16732/000001673226000004/exhibit991-q22026.htm
Campbell's Company Q1 FY2026 press release (prior quarter, for guidance comparison)
Campbell's Company Q2 FY2026 earnings call Q&A

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