Campbell's Issues Downbeat Outlook, Cuts Dividend Amid Inflation Headwinds
Campbell's (CPB) guided for a soft fiscal 2027 outlook amid persistent inflation worries and cut quarterly dividend, sending the packaged food company's shares lower on Thursday.The company expects adjusted per-share earnings of $1.65 to $1.80 and a 2% to 4% decline in net sales. Analysts in a FactSet poll are looking for non-GAAP EPS of $1.83 and a revenue drop of 1%. For fiscal 2026, adjusted EPS plunged 27% to $2.17 as sales declined 5% to $9.74 billion."Our fiscal 2027 outlook reflects an external environment that we expect will remain volatile, as well as another year of elevated inflation that will continue to pressure margins, particularly in the first half," Chief Executive Mick Beekhuizen said in prepared remarks for the earnings conference call. "However, our outlook also reflects the benefits of productivity, cost savings initiatives and pricing that we expect to build throughout the year and increasingly support margin recovery."Campbell's slashed its quarterly dividend to $0.25 per share from $0.39."This action is expected to reduce annual cash outflows by approximately $170 million, which we intend to direct towards debt reduction," Chief Financial Officer Todd Cunfer said.The company's shares plunged 9.6% intraday Thursday, and have slid 23% so far this year.US inflation has been running above the Federal Reserve's 2% target for more than five years, with some Fed officials recently calling for an interest rate hike amid renewed hostilities between the US and Iran that have sent oil prices higher.US consumer sentiment dropped in August amid concerns that inflation will continue to be high for the "foreseeable future," University of Michigan said Friday.Campbell's adjusted EPS for fiscal fourth quarter ended Aug. 2 declined to $0.39 from $0.62 a year earlier. Sales dropped 8% to $2.14 billion. Both were in line with consensus estimates."Our fourth-quarter results reflected many of the same challenges we have faced in recent quarters, with profitability coming in as expected," Beekhuizen said. "Make no mistake, our results remain unacceptable. But instead of waiting for the environment to improve around us, we are addressing reality head-on."Campbell's launched a cost-cutting program to generate $500 million of savings by fiscal 2030. The program "will transform how the company manages and deploys its direct and indirect spending," the company said.RBC Capital Markets flagged a challenging environment for packaged food in an Aug. 31 note."With more pricing ahead for both (Campbell's) and many of its peers, we struggle to envision a positive volume backdrop for (fiscal 2027) amid consumer health that we believe has worsened in recent months," RBC Co-Head of Global Consumer and Retail Research Nik Modi wrote in the note.Last month, food company Hormel Foods (HRL) lowered its fiscal 2026 sales outlook as it reported mixed third-quarter results, with the top line pressured amid a challenging consumer environment. Flowers Foods (FLO) cut its full-year outlook and reported lower-than-expected fiscal second-quarter results. J.M. Smucker (SJM), another food producer, lifted its full-year outlook and reported stronger-than-expected fiscal first-quarter results, with earnings getting a boost from tariff refunds.Price: $21.76, Change: $-2.03, Percent Change: -8.52%
