Has Kraft Heinz hit rock bottom?

CHICAGO — Steve Cahillane’s decision to pause the Kraft Heinz Co.’s planned separation is an indicator of how the company has been managed for the past decade. In comments made Feb. 11, the company’s chief executive officer frequently came back to the topic of “underinvestment.”  

“We know the history of Kraft Heinz over the last 10 years,” Cahillane said during a Feb. 11 conference call to discuss the fiscal year results. “So, I came in with the expectation that I would find underinvestment.”

As a result, the company has committed to investing $600 million in fiscal 2026 to return the company to growth in fiscal 2027.

“To turn this around, we are increasing investments in R&D by approximately 20% in 2026 compared to 2025,” Cahillane said. “Our innovation and renovation strategy will have an emphasis on value across three key consumer-driven platforms — nutrition, convenience and new occasions.”

The company also plans to increase its marketing investment by 5.5% of net sales during the year and improve commercial execution through investments in marketing and sales resources and capabilities.

“We acknowledge that our current teams are too lean and this is limiting our ability to execute consistently,” Cahillane said. “The investment in our sales organization will enable us to build stronger joint business plans with better execution. Across marketing, we will be better equipped to drive demand through sharper consumer insights, stronger brand positioning, and better supported product launches.”

Much of the first quarter has been spent planning and Cahillane said spending will ramp up in the company’s second quarter.

“It will be across the portfolio, but a lot will be against what we heretofore have been calling the North American Grocery Co., where we’ve got some opportunities to really do better,” Cahillane said.

Robert Moskow, an analyst with TD Cowen, said investors will view the decision to pause the separation and the subsequent $600 million investment negatively, “because it indicates the businesses are not in strong enough condition to operate on a standalone basis …”

The company’s stock price opened on Feb. 11 at $23.80 and rose 5% to close at $24.99.

“With consensus estimates for 2026 adjusted EPS likely to move down almost 20%, we’d admit we are surprised the shares have recovered after opening down,” said Max Gumport, senior analyst with BNP Paribas Equity Research. “We continue to believe that while the announced $600 million in investments is the right long-term move for the company, it should pressure the shares given the much larger-than-anticipated headwind to profit.”

Poor year, weak outlook

Spurring the need for the $600 million investment was a fiscal 2025 performance that could best be described as abysmal. For the year ended Dec. 27, 2025, Kraft Heinz incurred a loss of $5.9 billion, down significantly from fiscal 2024 when the company earned $2.7 billion, equal to $2.27 per share on the common stock. Contributing to the loss was a $9.3 billion impairment charge taken during the second quarter of fiscal 2025.

Total fiscal 2025 sales fell 3.5% to $24.9 billion from $25.8 billion.

In North America, sales fell 4.9% to $18.6 billion from $19.5 billion the year before. Perhaps more disturbing for company management was the performance of the company’s Accelerate platform — which features brands focused on driving growth and higher margins for the company — that saw organic sales fall 5.2%.

“The majority of the decline came from three areas — Lunchables, Spoonables, and frozen meals and snacks,” Cahillane said.

Regarding separating the company, Cahillane said he understood the board of directors’ decision and endorsed the initiative.

“I think it makes logical sense,” he said of the separation. “And I think the board came to the right conclusion at the time.

“What I’ve since learned is how much opportunity there is to fix the business in the short term and to turn the business around in a more positive trajectory and because resources are finite, I came to the conclusion that this was the best outcome for us.”

He also noted that market conditions “have gotten noticeably more challenging” since the board decided to breakup the company.

“Consumer sentiment has worsened, industry trends have softened, and there is increasing volatility in the geopolitical landscape,” he said. “These shifts make the path to recovery steeper and heighten the importance of restoring momentum in the business …”

He added that the goal of the investment in fiscal 2026 is to return the company to growth in fiscal 2027.

“We exit 2026 with the best trends that we’ve had during the course of the year,” he said. “That would be our expectation. And we go to 2027 with an eye toward growth.”

For fiscal 2026, Kraft Heinz is guiding that organic net sales will be down 1.5% to 3.5%. The outlook includes an incremental impact from changes to the Supplemental Nutrition Assistance Program, according to the company.