Categories Analysis, Consumer

Campbell Soup (CPB) expects inflationary pressures to persist through the upcoming fiscal year

Campbell expects core inflation of high single digits for the year with a more noticeable impact in the latter half

Shares of Campbell Soup Co. (NYSE: CPB) were up over 1% on Wednesday after the company reported better-than-expected earnings results for the fourth quarter of 2021. While revenue and adjusted EPS beat market estimates, the outlook for the full year of 2022 failed to meet expectations. Like its peers, Campbell has been bearing the brunt of inflation and this is expected to continue in the coming fiscal year as well. The stock has dropped 12% since the beginning of this year.

Quarterly performance

Net sales declined 11% to $1.87 billion in Q4 compared to the same quarter a year ago while organic sales fell 4%. This was because the prior-year quarter included the effects of pandemic-related pantry stocking and higher levels of at-home food consumption which has begun to wane now. On the bright side, both reported and organic sales increased 5% and 9% respectively, compared to the fourth quarter of 2019. Adjusted EPS fell 13% year-over-year to $0.55 in Q4.


Campbell’s Meals & Beverages segment witnessed a 16% decline in reported net sales and a 9% decline in organic net sales in Q4 compared to the year-ago period. This was caused by decreases in US retail products such as US soup, Prego pasta sauces and Pace Mexican sauces. US soup sales fell 21% compared to a 52% increase in the year-ago quarter. Organic net sales in this segment increased 10% compared to Q4 2019.

Sales in the Snacks segment fell 6% on a reported basis but inched up 1% on an organic basis, helped by volume gains in Goldfish crackers and salty snacks such as Snack Factory Pretzel Crisps, and Cape Cod potato chips. Organic net sales rose 7% versus Q4 2019.

Campbell saw elevated household penetration and repeat rates in both segments compared to pre-pandemic levels. The company is looking to roll out several new products in FY2022. Within the Pacific Foods business, Campbell plans to launch new plant-based products such as creamy oat milk soups and creamy plant-based protein broths.  

Cost savings and stock repurchases

Campbell achieved cost savings of $25 million in Q4 under its multi-year cost savings program and $80 million for the full year of 2021. This brings the total savings to approx. $805 million to-date. The company remains on track to deliver annualized savings of $850 million by the end of FY2022.

Campbell also approved a $500 million stock repurchase plan, which is in addition to the $250 million share repurchase program announced last quarter. It replaces the previous program of $1.5 billion.


Looking ahead into FY2022, Campbell will continue to lap the periods of high demand while facing pressure from increasing inflation. The company expects to partly offset these headwinds through pricing and productivity plans. The first quarter is expected to be the most difficult as pricing actions begin to take effect.

Campbell expects core inflation of high single digits for the year with a more noticeable impact in the latter half. The company expects to see a year-over-year improvement in EBIT margin during the second half of the year.

Click here to read the full transcript of Campbell Soup’s Q4 2021 earnings conference call

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