Campbell's Co. today (Sept. 3) reported troubling results for its fourth quarter and fiscal year that ended Aug. 2, including a 5% drop in sales (to $9.744 billion) and a 33% decline in net earnings. All segments of the company underperformed. As a result, the company cut its dividend and announced a new $500 million cost savings program on top of current plant closings and layoffs.

“Several actions are already underway, including the closure of two snacks plants in Hyannis [Mass.] and Jeffersonville [Ind.], and recently completed workforce reductions,” said CFO Todd Cunfer. “Through a voluntary early retirement program and involuntary reductions, we reduced our salaried workforce by approximately 13%.”

That reduction in force apparently was the result of a cost savings program already in place. “In the fourth quarter, Campbell's delivered approximately $25 million in savings, bringing total cost savings achieved to approximately $225 million pursuant to the company's prior $375 million savings program,” today’s announcement said.

“Beginning in fiscal 2027, Campbell's is launching a new program targeting total cost savings of $500 million by fiscal 2030, which will further accelerate our work to protect our margins and support higher investment levels. This new program will include initiatives remaining under the prior program, the overhead savings initiative announced during the third quarter of fiscal 2026 and an enterprise spend 4 optimization plan which will transform how the company manages and deploys its direct and indirect spending.”

“To help accelerate the path to reducing debt on the company's balance sheet,” the company lowered its dividend by 36%, to 25 cents per share each quarter or $1 per year.

Campbell’s has two reporting segments. Meals & Beverages sales decreased 4% and Snacks were off by 6%, the latter drop driven by salty snacks. Both also had volume decreases.

An exception was Rao’s, the premium pasta sauce maker it acquired along with Sovos Brands in early 2024. Consumption of the brand grew 11% last year, and Campbell's has extended it into frozen dinners and dry pasta.

“Rao’s remains one of our top priorities, with substantial runway for greater household penetration, awareness and expansion both within the broader Italian sauce category and adjacent areas of the store,” said Mick Beekhuizen, who has been Campbell’s president/CEO for 18 months.

“We are also changing our approach to marketing support,” he continued. “Specifically, we will direct a majority of this year’s marketing budget toward our best opportunities, moving away from what has historically been a balanced approach across our portfolio. Let me be clear: we are not walking away from any business or brand. However, our marketing investments must work harder for us.

Its guidance for fiscal 2027 includes a net sales decline of 2-4% and adjusted earnings drop of 7-12%.

“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,” Beekhuizen continued. “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.”