CAMDEN, NJ. — Executives of The Campbell’s Co. lowered sales guidance for the fiscal year after a disappointing performance in the company’s Snacks segment and a companywide organic net sales decline in the second quarter ended Jan. 26.

Net earnings of $173 million, or 58¢ per share on the common stock, were down 15% from $203 million, or 68¢ per share, in the previous year’s second quarter. Net sales increased 9% to $2.69 billion from $2.46 billion, driven by the acquisition of Sovos Brands, Inc. Organic sales declined 2%, driven by net price realization with flat volume/mix.

“Similar to the first quarter, our Q2 earnings performance was in line with our expectations despite the dynamic operating environment,” said Mick Beekhuizen, president and chief executive officer, in a March 5 earnings call. “Unfortunately, the anticipated recovery of some of our snacks categories did not materialize during the quarter, and as a result, our top line was slightly below expectations.”

For the fiscal year, Camden-based Campbell’s now expects net sales growth of about 6% to 8%, down from a previous guidance of 9% to 11%, and organic net sales in a range of down 2% to flat, which compared to previous guidance of flat to a 2% increase.

“This updated guidance does not reflect any impact on our business from tariffs or other regulatory changes,” Beekhuizen said. “This is a fluid situation, and we are working through mitigation plans for a variety of scenarios.”

Tariffs would have a negative impact on soup since Campbell’s produces its products in the United States and sells it in Canada, he said. Tariffs also would impact cans negatively, since Campbell’s imports steel from Canada to use in the cans, and canola oil, since Campbell’s imports canola oil from Canada.

“Now from a mitigation perspective, we're closely working with our suppliers to mitigate potential impact,” Beekhuizen said. “At the same time, depending on how long these tariffs would be in place, as well as the extent of the tariff, we might need to take other actions, and that could include, for instance, pricing for some of our products.”

In Campbell’s Meals & Beverages segment in the second quarter, net sales increased 21% to $1.68 billion from $1.38 billion due to the acquisition of Sovos Brands. Excluding the acquisition, organic net sales decreased 1%, driven by declines in SpaghettiOs, which was impacted negatively by a supplier disruption, and US Soup. Gains in foodservice partially offset the organic sales decline. Lower net price realization of 2% was offset partially by favorable volume/mix of 1%. Operating earnings increased 18% to $291 million from $247 million. Higher marketing and selling expenses partially offset the Sovos acquisition.

Sales of US Soup fell primarily due to decreases in ready-to-serve soups and condensed soups, partially offset by an increase in broth.

“Our soup portfolio continues to benefit from increased at-home cooking activity, leading to growth in both condensed cooking and broth,” Beekhuizen said. “However, eating soup categories, both within condensed eating and ready-to-serve, was slightly weaker. That being said, we marked our fifth consecutive quarter of volume share growth in Campbell’s total wet soup, including Rao’s.”

The Rao’s brand was part of the Sovos acquisition.

Campbell’s Italian sauce portfolio, which includes the Prego and Rao’s brands, had a share gain of 1.4 points.

“Starting with Prego, we saw steady growth both in dollars and volume consumption, and we grew dollar share by 20 basis points in the second quarter,” Beekhuizen said. “Prego grew household penetration in the second quarter year over year with growth across all generational cohorts. Our ultra-distinctive Rao's sauce continued to outpace the Italian sauce category, resulting in 1.3 points of share gain in the quarter. The first quarter of fiscal '25 benefited from a shift in promotional timing, specifically in the club channel.”

In Campbell’s Snacks segment in the quarter, net sales decreased 6% to $1.01 billion from $1.07 billion. Excluding the impact of the Pop Secret divestiture, organic net sales decreased 3%, driven by declines in third-party partner and contract brands, Goldfish crackers, and Snyder’s of Hanover pretzels. Negative impacts came from volume/mix declines of 2% and lower net price realization of 1%. Operating earnings decreased 29% to $114 million from $161 million, primarily due to lower gross profit and higher marketing and selling expenses.

“The volume for our snacks business was down 370 basis points year over year,” Beekhuizen said. “About half was driven by a planned increase in commercial investment to support incremental promotional activity and marketing during the holiday season. The remainder was for short-term operational supply chain headwinds, particularly in our fresh bakery network, that resulted in increased manufacturing and logistics costs to maintain service levels during the holidays and unfavorable mix.

“We are proactively addressing snacks margin and anticipate a recovery in Q3, with a gradual improvement throughout the second half of the fiscal year. In fact, we are starting to lap more normalized promotional and marketing activity, and we are already seeing improvements from a supply chain perspective.”

Over the first six months of the fiscal year, Campbell’s had net earnings of $391 million, or $1.31 per share on the common stock, down 11% from $437 million, or $1.47 per share, at the same time of the previous year. Net sales in the six-month period increased 10% to $5.46 billion from $4.97 billion.