Can Campbell's Snacks Business Stabilize After a Gradual Recovery in 2H25?

The Campbell's Company’s CPB snacks business wrapped up fiscal 2025 with mixed results, showing some early signs of improvement while still facing pressures. This raises concerns about the company’s stabilization plans in the second half of fiscal 2026.

In the fourth quarter of fiscal 2025, reported net sales for the snacks segment rose 2%, but organic net sales fell 2% after adjusting for the extra week and divestitures. The decline reflected a 5% drop in volume and mix, partially offset by a 2% gain from net pricing. Management acknowledged that the category is still in transition, though it highlighted progress across key brands, signaling that the business may be turning a corner.

Five of the eight leading snack brands posted sequential share gains in the fourth quarter, while four saw dollar consumption growth compared to the previous quarter. Innovation played a key role in that momentum. For instance, the Milano White Chocolate limited-edition cookie boosted Milano consumption by 27% and drew new interest in the category. Snack Factory’s Pop’ums and Bites delivered back-to-back quarters of share gains, and Kettle, Cape Cod and Late July chips all showed sequential improvement.

Campbell’s aims to sustain momentum by boosting brand investment, enhancing packaging and optimizing price-pack structures around multipacks. Management also emphasized stronger in-market execution and wider distribution as key focus areas for fiscal 2026. CPB expects these steps, along with continued innovation and higher marketing support, to help stabilize volumes in the latter half of the year.

However, profitability remains a challenge. CPB’s Snacks segment operating margin slipped 30 basis points year over year to 14.2% in the fourth quarter, as increased marketing and selling expenses outweighed gross profit gains. 

All said, Campbell’s snacks portfolio shows a path toward gradual recovery, though success will depend on execution — particularly around innovation speed, retail activation and disciplined cost control. The Zacks Rank #3 (Hold) company has seen its shares rise 1.2% in the past three months against the industry’s decline of 3.3%.

Food Stocks to Consider

United Natural Foods UNFI engages in the distribution of natural, organic, specialty, produce, and conventional grocery and non-food products. It currently sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for United Natural’s current fiscal-year sales and earnings indicates growth of 2.4% and 167.6%, respectively, from the prior-year levels. UNFI delivered a trailing four-quarter earnings surprise of 416.2%, on average.

Smithfield Foods, Inc. SFD produces packaged meats and fresh pork in the United States and internationally. It sports a Zacks Rank #1 at present. SFD delivered a trailing four-quarter earnings surprise of 6.6%, on average.

The Zacks Consensus Estimate for Smithfield Foods’ current fiscal-year sales and earnings indicates growth of 7.1% and 28.7%, respectively, from the prior-year levels.

Vital Farms VITL packages, markets, and distributes shell eggs, butter and other products. It carries a Zacks Rank #2 (Buy) at present. VITL delivered a trailing four-quarter earnings surprise of 35.8%, on average. 

The Zacks Consensus Estimate for Vital Farms’ current fiscal-year sales and earnings implies an increase of 27.3% and 14.4%, respectively, from the prior-year levels.

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This article originally published on Zacks Investment Research (zacks.com).

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