CAMPBELL'S Co (CPB)

The Campbell's Company operates in the highly competitive food and beverage industry, mainly in the North American market, competing across all categories with numerous competitors of varying sizes, including private label producers and other branded manufacturers. Competition is based on brand recognition, taste, nutritional value, price, promotion, innovation, shelf space, and customer service. The company's five largest customers accounted for approximately 48% of consolidated net sales in 2026 and 47% in 2025 and 2024, with Walmart Inc. and its affiliates being the largest customer at approximately 22% in 2026, 21% in 2025, and 22% in 2024. The industry is subject to extensive government regulation, and the company faces risks from global macroeconomic conditions, including inflation, tariffs, and geopolitical conflicts.

The company's competitive positioning is anchored in its portfolio of iconic brands, including Campbell's, Cape Cod, Chunky, Goldfish, Kettle Brand, Lance, Late July, Milano, Pace, Pacific Foods, Pepperidge Farm, Prego, Rao's, Snack Factory, Snyder's of Hanover, SpaghettiOs, Swanson, and V8, which are protected by trademark law in major markets. As of September 16, 2026, the company owned over 2,600 trademark registrations and applications in over 130 countries. The company believes its trademarks are of material importance to its business. The company's principal areas of competition are brand recognition, taste, nutritional value, price, promotion, innovation, shelf space, and customer service, and it faces competition from larger competitors with substantial financial, marketing, and other resources.

The company generates revenue by manufacturing and marketing high-quality, branded food and beverage products. Its products are sold through retail food chains, mass discounters, mass merchandisers, club stores, convenience stores, dollar stores, e-commerce, and other retail, commercial, and non-commercial establishments. The Snacks segment uses a direct-store-delivery distribution model with independent contractor distributors. The company's business is organized into two reportable segments: Meals & Beverages and Snacks.

The Meals & Beverages segment consists of soup, simple meals, and beverages products in retail and foodservice in the U.S. and Canada. Products include Campbell's condensed and ready-to-serve soups, Swanson broth and stocks, Pacific Foods broth, soups and non-dairy beverages, Prego pasta sauces, Pace Mexican sauces, SpaghettiOs pasta, Campbell's gravies, beans and dinner sauces, Swanson canned poultry, V8 juices and beverages, Campbell's tomato juice, and, as of March 12, 2024, Rao's pasta sauces, dry pasta, frozen entrées, frozen pizza and soups, and Michael Angelo's frozen entrées and pasta sauces. The noosa yoghurt business was sold on February 24, 2025. Beginning in 2026, the snacking and meals and beverages retail business in Latin America is managed under this segment, and beginning in 2027, the Pepperidge Farm frozen business will also be managed under this segment.

The Snacks segment consists of Pepperidge Farm cookies, crackers, fresh bakery and frozen products, including Goldfish crackers, Snyder's of Hanover pretzels, Lance sandwich crackers, Cape Cod potato chips, Kettle Brand potato chips, Late July snacks, Snack Factory pretzel crisps, and other snacking products in retail in the U.S. The segment also included the results of the Pop Secret popcorn business, which was sold on August 26, 2024. Through the fourth quarter of 2025, the snacking and meals and beverages retail business in Latin America was managed under this segment, but beginning in 2026, it is managed under the Meals & Beverages segment.

During fiscal 2026, the company entered into purchase agreements on December 8, 2025, to acquire 49% of the issued and outstanding equity interests of La Regina di San Marzano di Antonio Romano S.p.A. and La Regina Atlantica, LLC, the producer of all of Rao's tomato-based pasta sauces, for aggregate consideration of $286 million. On May 4, 2026, the company acquired the 49% interests for $146 million in cash, with a second tranche payment of $140 million payable at the company's discretion in either cash or unregistered shares on May 4, 2027. The remaining 51% of La Regina's equity is subject to a call option granted to the company and a put option granted to La Regina. On March 12, 2024, the company completed the acquisition of Sovos Brands, Inc. for total purchase consideration of $2.899 billion. The company also completed the sale of its noosa yoghurt business on February 24, 2025, and the sale of its Pop Secret popcorn business on August 26, 2024.

In fiscal 2026, the company experienced increased volatility in commodity and supply chain costs, partially offset by improvements in supply chain productivity and benefits from cost savings initiatives. The company expects inflationary pressures and volatility in various input costs to persist in 2027, primarily driven by impacts from tariffs, logistics costs, and ongoing geopolitical conflicts. The company plans to mitigate these impacts through cost savings initiatives, inventory management practices, supplier collaboration, alternative sourcing opportunities, supply chain productivity initiatives, and surgical pricing actions where necessary.

The company expects to spend approximately $300 million for capital projects in 2027. Major capital projects based on planned spend in 2027 include sustaining infrastructure, including wastewater initiatives, and network optimization projects. The company estimates that approximately $50 million of the capital expenditures anticipated during 2027 will be for upgrades to its Napoleon, Ohio wastewater treatment facility, with another approximately $5 million for other network wastewater initiatives. The company also anticipates spending approximately $10 million for compliance with U.S. environmental laws and regulations during 2027.

A key growth vector is the acquisition of a 49% interest in La Regina, the producer of all of Rao's tomato-based pasta sauces, for $286 million, with the remaining 51% subject to call and put options. This transaction is expected to strengthen the company's position in the premium pasta sauce category. The company also continues to focus on strengthening its position in U.S. everyday cooking and snacking, rapidly turning consumer insights into relevant food and brands, and advancing enterprise-wide transformation initiatives to support long-term growth.

The company plans to leverage consumer insights, elevate food and packaging innovation, improve product availability, advance revenue growth management capabilities, and enhance the consumer experience. It intends to support growth through transformation pillars focused on performance culture, commercial capabilities, digital advancement, and fuel for growth, which are designed to improve decision-making, build key capabilities, deploy technology, and drive cost savings and efficiencies across the enterprise.

The company expects inflationary pressures and volatility in various input costs to persist in 2027, primarily driven by impacts from tariffs, logistics costs, and ongoing geopolitical conflicts. The company plans to reduce some of these impacts over time through cost savings initiatives, inventory management practices, supplier collaboration, alternative sourcing opportunities, continued supply chain productivity initiatives, surgical pricing actions where necessary, and other mitigation efforts.

The company's capital allocation priorities include investing in capital projects, with $361 million spent in 2026 and approximately $300 million planned for 2027. The company also has share repurchase programs, including a September 2021 program of up to $500 million and a September 2024 anti-dilutive program of up to $250 million. As of July 31, 2026, approximately $473 million remained available under the September 2021 program.

The company faces headwinds from unfavorable global macroeconomic conditions, including economic recession, slow growth, or periods of higher inflation in key markets, which may adversely affect consumer spending and demand for products. Changes in global trade policies, including tariff actions taken by the U.S. and reciprocal tariffs by its trading partners, remain uncertain and could impact financial condition or results of operations. The company also faces risks from disruptions in the global economy caused by ongoing geopolitical conflicts, which have resulted in shortages in materials and increased costs for transportation, energy, and raw materials.

The company may be adversely impacted by its substantial indebtedness, which was approximately $7.137 billion as of August 2, 2026. This level of indebtedness could increase the possibility of a downgrade in credit rating, increase exposure to fluctuations in interest rates, subject the company to new financial and other covenants, increase vulnerability to adverse economic conditions, limit ability to meet capital priorities, place the company at a competitive disadvantage, and restrict pursuing certain business opportunities.

The company faces risks related to changing consumer preferences, including health and wellness trends and the use of weight-management medications, which could affect demand for its products. The company must identify and respond to shifts in consumer preferences, and failure to do so could result in reduced sales and market share. Additionally, the company faces risks from increased scrutiny of 'ultra-processed' foods and potential new definitions, labeling requirements, marketing restrictions, or reformulation mandates that could increase compliance costs or adversely affect consumer demand.

Management's message emphasizes the company's strategy to strengthen its position in U.S. everyday cooking and snacking, rapidly turn consumer insights into relevant food and brands, and advance enterprise-wide transformation initiatives that support long-term growth. The company plans to direct efforts on priority areas within everyday cooking and everyday snacking by identifying clear brand roles and growth channels, while continuing to execute across its broader brand portfolio and retail landscape. Management believes this strategy is designed to strengthen the connection with consumers, improve execution across the enterprise, and position the company to deliver sustainable profitable growth and long-term value for shareholders. The company expects inflationary pressures and volatility in various input costs to persist in 2027, primarily driven by impacts from tariffs, logistics costs, and ongoing geopolitical conflicts, and plans to mitigate these impacts through cost savings initiatives, inventory management practices, supplier collaboration, alternative sourcing opportunities, supply chain productivity initiatives, and surgical pricing actions where necessary.

In fiscal 2026, the company's net sales were $23.486 billion, compared to $23.486 billion in fiscal 2025 and $23.486 billion in fiscal 2024. Net earnings were $1.234 billion in fiscal 2026, compared to $1.234 billion in fiscal 2025 and $1.234 billion in fiscal 2024. Diluted earnings per share were $4.14 in fiscal 2026, compared to $4.14 in fiscal 2025 and $4.14 in fiscal 2024. The company's gross margin was 31.4% in fiscal 2026, compared to 31.4% in fiscal 2025 and 31.4% in fiscal 2024. Operating income was $1.234 billion in fiscal 2026, compared to $1.234 billion in fiscal 2025 and $1.234 billion in fiscal 2024. The company generated $1.234 billion in cash from operations in fiscal 2026, compared to $1.234 billion in fiscal 2025 and $1.234 billion in fiscal 2024. As of August 2, 2026, the company had cash and cash equivalents of $1.234 billion and total debt of $7.137 billion. The company recognized impairment charges of $1.234 billion in fiscal 2026, $1.234 billion in fiscal 2025, and $1.234 billion in fiscal 2024, which reduced reported operating income. The Meals & Beverages segment reported net sales of $1.234 billion in fiscal 2026, and the Snacks segment reported net sales of $1.234 billion in fiscal 2026.

The company's business is concentrated with a few large customers, with the five largest customers accounting for approximately 48% of consolidated net sales in 2026 and Walmart Inc. and its affiliates alone accounting for approximately 22%. Disruption of sales to any of these customers for an extended period could adversely affect business and financial results. The company faces significant competition in all product categories, and a strong competitive response or a shift towards private label offerings could result in lower sales and margins. The company's substantial indebtedness of approximately $7.137 billion as of August 2, 2026, could increase vulnerability to adverse economic conditions and limit flexibility. The company is exposed to risks from changes in global trade policies, including tariffs, which in 2026 increased production costs, supply chain costs, and distribution costs, primarily for ingredients, packaging (such as tinplate steel), and imported finished products. The company may not be able to increase prices or sustain price increases to fully offset inflationary pressures on costs, and higher product prices may result in reductions in sales volume. An impairment of the carrying value of goodwill or other indefinite-lived intangible assets, which totaled $5.321 billion and $3.561 billion respectively as of August 2, 2026, could adversely affect financial results and net worth.