Campbell’s stock drops as CEO departure and mixed earnings weigh on investors

Campbell’s stock falls sharply, declining by 5.5% on Wednesday to close at $43.01, nearing its lowest point since June. The drop followed the packaged food giant’s fiscal Q1 2025 earnings report and the announcement of CEO Mark Clouse stepping down after six years at the helm. Meanwhile, the S&P 500 saw modest gains, rising 0.3%.

Mixed results for fiscal Q1 2025

Campbell’s reported a 10% rise in net sales, reaching $2.8 billion, largely attributed to the Sovos Brands acquisition completed earlier this year. On an organic basis, however, sales dipped 1%, reflecting pricing challenges despite stable volume. Adjusted gross margin slipped slightly, impacted by inflation and costs associated with integrating Sovos Brands.

Adjusted earnings per share fell 2% to $0.89, while EBIT rose 6% to $432 million. CEO Mark Clouse remarked that fiscal Q1 2025 aligned with expectations, even amid a challenging packaged food industry marked by uneven consumer recovery and inflationary pressures.

The company reaffirmed its full-year fiscal 2025 guidance and announced a dividend increase to $0.39 per share, a 5% rise reflecting confidence in its financial health.

Cost pressures and strategic investments

In fiscal Q1 2025, Campbell’s gross profit grew to $867 million, although its adjusted gross margin fell modestly due to inflation, supply chain challenges, and integration costs from the Sovos Brands acquisition. Marketing and selling expenses climbed 13% to $250 million, driven by promotional efforts related to the new acquisition. Despite these pressures, Campbell’s saved $30 million under its new cost savings program.

The company also returned value to shareholders through a $54 million stock repurchase and authorized a $250 million anti-dilutive share buyback program to offset stock dilution.

CEO leadership transition raises uncertainty

Market reaction was further fueled by the announcement of a CEO leadership transition. CEO Mark Clouse will step down on January 31, 2025, after driving significant transformations since 2019. His tenure included reshaping Campbell’s portfolio with the Sovos Brands acquisition, strengthening its core soup segment, and achieving consistent growth despite headwinds in the packaged food industry.

Clouse, who will become president of the NFL’s Washington Commanders, cited his passion for sports as the primary reason for his decision. Campbell’s Board elected Mick Beekhuizen, currently President of Meals & Beverages, to succeed him starting February 1, 2025. Beekhuizen, instrumental in overseeing the Sovos integration, will focus on accelerating the company’s strategic momentum.

Market outlook remains cautious

While Campbell’s reaffirmed its fiscal 2025 guidance, investors remain wary amid concerns over its organic sales decline, pressured margins, and upcoming leadership change. The critical holiday season is expected to serve as a test of the company’s resilience and ability to deliver on its promises under new leadership.

The packaged food industry continues to grapple with shifting consumer behavior, but Campbell’s management is optimistic. With its new cost savings initiatives, a growing portfolio from the Sovos Brands acquisition, and a focus on operational efficiency, the company believes it is well-positioned to navigate the challenges ahead.