Investors were hopeful heading into Campbell Soup's (CPB -0.66%) closing of its fiscal 2019 year. The consumer staples giant's last few reports contained signs of an operating rebound following a tough period that included market share losses and major impairment charges.

The latest results continued that encouraging recovery as the chain met management's forecast on the top and bottom lines. Campbell Soup also predicted further profitability gains in the context of flat overall sales.

Let's take a closer look. 


Q4 2019

Q4 2018



$1.8 billion

$1.75 billion


Net income (loss)

($8 million)

$94 million


Earnings (loss) per share




Data source: Campbell Soup.

What happened this quarter?

Sales inched along at near flat but accelerated when compared with recent quarters. That success was enough to give management confidence as it looks to a new fiscal year.

A bowl of steaming hot soup.

Image source: Getty Images.

Here are some of the highlights from the quarter:

  • Organic sales rebounded from the sluggish results shareholders have seen in recent quarters, rising to a 2% increase versus flat results last quarter and a 1% decrease over the preceding 12 months.
  • Campbell's managed modest upticks in both average prices and sales volumes while holding the line on promotions. The snack business, which now includes brands acquired from the buyout of Snyder's-Lance, fared better than the core meals segment.
  • Gross profit margin inched up by 0.6 percentage points to 33.7%, after allowing for one-time accounting charges.
  • Campbell's spent aggressively on marketing many of its snack products, leading to a 5% increase in selling expenses. As a result, adjusted operating earnings, which account for its major acquisitions and divestments in 2018, increased 1% versus the 2% sales uptick. 

What management had to say

Executives highlighted the fact that they just closed a full year of business improvements that more or less tracked with their expectations. In a press release, CEO Mark Clouse said, "Our strong fourth-quarter results culminated in a year of steady, positive performance for Campbell [wherein] we met or exceeded expectations for four consecutive quarters."

Specifically, management highlighted business wins around market share and lowering costs. "We made significant progress against our 2019 strategic initiatives, namely: improving our in-market performance; overdelivering our cost savings programs ... and completing the divestiture of Campbell Fresh and announcing the divestiture of Campbell International," Clouse said.

Looking forward

The company's new portfolio, which today is heavier on snacks and free from the weight that its Campbell Fresh segment had become, is predicted to deliver modest operating improvements over the next year. Executives forecast organic growth of about 1%, compared with the past year's flat result. Adjusted earnings are also on pace to rise between 2% and 4%, indicating a slight boost in profitability that builds on last year's 1% increase.

Those are modest predictions, but they leave room for outperformance if Campbell's can achieve better returns from its recent marketing investments. Given the stock's rally in response to the report, and over the broader 2019 calendar year, investors appear to be betting that the stabilization is just the beginning of a bigger rebound to come.