Dive Brief:
- The Campbell’s Company cut 13% of its salaried workforce as part of a plan to slash $500 million in costs by 2030, with CEO Mick Beekhuizen saying the company needs to take "decisive action" to improve performance.
- The packaged food maker is also closing two snack plants as it aims to protect margins and support higher levels of investment. Campbell's added it will cut its quarterly dividend by 36% to generate savings that will be directed to other parts of its business.
- The announcement comes as Campbell’s posted a loss during its fourth quarter, with sales slipping 8% to $2.14 billion. Sales in its snacks business, which includes Goldfish and Pepperidge Farm, plunged 12% during the period. In meals and beverages, home to Rao’s, V8 and its iconic soups, sales dipped 4%.
Dive Insight:
As consumers continue to rein in their spending, food companies are feeling the heat. Beekhuizen said cost cuts at Campbell's are necessary to support greater investment in brands to position them for success.
“Our performance is not where it needs to be, and we are taking decisive action to improve it,” Beekhuizen said in a statement. “We are increasing our focus on the consumer, sharpening execution, reducing costs to support investment in our brands, and strengthening our balance sheet.”
Going forward, Campbell’s sees a difficult operating environment, with organic sales forecast to decline in fiscal 2027 between 2% and 4%.
Several food companies have announced sweeping changes to cut costs and bring back cash-strapped consumers through price cuts and boosts in innovation.
John Brase, Conagra Brands’ new CEO, told Food Dive in July he is preparing to make “bold decisions” to turn around the Slim Jim maker, which has been dogged by a complex portfolio and a failure to invest enough in growing the company’s on-trend snack and frozen offerings. Conagra's organic net sales are forecast to decline between 1% and 3%, after slipping 0.4% in the prior year.
Campbell’s is similarly pulling off the proverbial Band-Aid by announcing several changes to improve its financial picture, including a reduction in its own dividend.
The $500 million cost-cutting initiative is designed to improve speed and accountability while supporting margins and cash flow, the company said.
“We expect the operating environment to remain challenging, with continued pressure on consumers and elevated costs affecting our margins,” Beekhuizen said. “We are not waiting for these conditions to improve.”
Snacks continue to weigh on Campbell’s operations, led by ongoing challenges in salty offerings. Organic net sales fell 6% due in part to a drop in consumer purchases. Chips sales were hit especially hard, down 9.4%, largely driven by struggles in Cape Cod and Kettle Brand as the segment continues to face heightened competition.
To improve the business, Campbell’s is taking a series of steps to reduce costs and tighten its product assortment. “There is a lot of hard work ahead to turn around our Snacks performance,” Beekhuizen conceded.
Max Gumport, a senior analyst with BNP Paribas Equity Research, said Campbell’s 2027 outlook was worse than expected.
“The company’s phasing suggests a difficult start to the year with both organic net sales and profit below the lower end of the full year range,” Gumport said in a research note. “[W]e believe CPB still has much to prove before investors gain more confidence, particularly given recent tracked channel trends for the company’s salty snacks business.”
