Campbell Soup(NYSE: CPB) reported fourth quarter fiscal 2025 earnings on September 3, 2025, with organic net sales down 3% and adjusted EBIT down 2% year-over-year, but results slightly exceeded internal expectations. Management raised its enterprise cost savings target by 50% to $375 million by fiscal 2028, while fiscal 2026 guidance anticipates adjusted EPS will decline 12%-18% due to significant tariff headwinds and elevated input costs. The following insights highlight key strategic developments, risk factors, and competitive strengths from the call.

Cost savings target rises for Campbell Soup

Campbell increased its enterprise-wide cost savings program target from $250 million to $375 million by fiscal 2028, following $145 million in realized savings in fiscal 2025, primarily from Sovos Brands integration and network optimization. This expanded target reflects a more aggressive approach to efficiency, digital transformation, and indirect spend management, supporting reinvestment in core brands.

“Today, we are increasing our cost savings target to $375 million by the end of fiscal 2028, a 50% increase over the previous estimate. PEEK will continue to focus on four areas: network optimization, integration synergies, technology and organization effectiveness, and indirect spend management.”
— Carrie Anderson, Chief Financial Officer

This step-up in cost savings ambition provides Campbell with greater flexibility to offset inflationary pressures and fund marketing and innovation, but also raises execution risk if integration or productivity initiatives underdeliver.

Tariff headwinds pressure Campbell Soup margins

For fiscal 2026, gross tariffs are projected at approximately 4% of cost of products sold, with about 60% of the impact from Section 232 steel and aluminum tariffs affecting the soup can supply chain, and the remainder from global IPEA tariffs and Rao’s imports from Italy. Management expects to mitigate only 60% of these tariffs through supplier collaboration, alternative sourcing, productivity, and targeted pricing actions.

“Gross tariffs are projected at approximately 4% of cost of products sold, approximately 60% related to Section 232 steel and aluminum tariffs, and the remainder largely from global IPEA tariffs. Despite the ongoing uncertainties around the IPEA tariffs, we are still assuming that they remain in place for the year. We expect to mitigate approximately 60% of this impact through a number of actions,”
— Carrie Anderson, Chief Financial Officer

Persistent tariff-related cost inflation will weigh heavily on Campbell’s margins in fiscal 2026, requiring further pricing, supply chain, or structural changes to protect profitability if mitigation efforts fall short.

Brand leadership and innovation drive Campbell’s resilience

In fiscal 2025, Campbell’s 16 leadership brands represented about 90% of total net sales, with meals and beverages gaining 0.2 share points and delivering 1% dollar consumption growth, offsetting softness in snacks. Rao’s brand net sales rose at a high single-digit rate on a pro forma basis, and recent innovation contributed approximately 3% to consolidated net sales, led by Milano White Chocolate and health-forward broth offerings.

“Our stronghold in the Italian sauce category continues as Rao’s, which will soon become our fourth billion-dollar brand, and Prego hold the top two spots in dollar share, and we are excited about the prospects for future growth with these great brands.”
— Mick Beekhuizen, Chief Executive Officer

Campbell’s ability to maintain category leadership and drive measurable growth through innovation and brand investment underpins its long-term market position, even as short-term volumes remain pressured by cautious consumer behavior.

Looking Ahead

Management guided fiscal 2026 adjusted EBIT down 9%-13% and adjusted EPS down 12%-18%, primarily due to tariff headwinds and increased investment in marketing and innovation, with organic net sales expected to range from down 1% to up 1%. Capital expenditures are projected at 4% of net sales in fiscal 2026, with planned cost savings of approximately $70 million. All forecasts are on a comparable 52-week basis, excluding the extra week from fiscal 2025 and divestiture impacts, and no additional quantitative guidance was disclosed regarding segment profit or volume mix.