Campbell Soup Company reported QQ1 2025 results with a reported net sales increase of 10% to $2.772 billion, led by the Sovos acquisition, while organic net sales declined 1% due to dynamic consumer conditions and timing-related retailer inventory shifts tied to Thanksgiving this year. Management highlighted meaningful progress on the Sovos integration and continued momentum from Rao's, with Leadership Brands delivering growth in both dollar consumption and market share.
Adjusted EBIT rose 6% year over year, and adjusted EPS was $0.89, with the acquisition broadly neutral to adjusted EPS in the quarter. The margin mix was affected by the higher proportion of Rao's and Sovos (lower-margin profiles) versus legacy Campbell businesses, yielding a gross-margin compression of about 70 basis points. Nonetheless, the company reinforced its full-year guidance and signaled continued margin and cost-saving acceleration through a new $250 million cost-savings program, with pro forma Rao's growth now expected to exceed 10% for fiscal 2025. Free cash flow was solid at $115 million for the quarter, and Campbell reiterated its objective to restore debt leverage toward 3x by 2027 while continuing to return cash to shareholders via dividends and share repurchases. The upcoming Q2 holiday period remains a critical milestone for progress toward full-year commitments.
Overall, Campbell is navigating a progressively improving consumer environment, leveraging Sovos and Rao's to offset near-term organic softness, while investing behind leadership brands and efficiency programs to position the business for sustainable, long-term earnings growth.