Conagra Falls as High Steel Costs, Rivals' Price Cuts Hit Sales
Conagra Slumps After Quarterly Results Fall Short of Estimates
(Bloomberg) -- Conagra Brands Inc. tumbled as much as 13% after the frozen-food and snacks giant posted results that were below expectations in the latest quarter. Higher steel prices and strong competition from cheaper private-label brands were big headwinds, Chief Executive Officer Sean Connolly said in an interview.
- Sales were $2.61 billion in the fourth quarter ended May 26, the company said Thursday in a statement, while analysts anticipated $2.66 billion, on average.
Key Insights
The company said a 14% jump in steel can prices forced it to raise prices for some products, like Hunt’s tomatoes and Chef Boyardee -- but private-label brands didn’t follow suit, leading to price gaps customers couldn’t ignore. Conagra also blamed several "one-off" manufacturing challenges and weak performance in its Ardent Mills flour joint venture for the shortfall.
The recent acquisition of frozen-food company Pinnacle helped boost sales overall, and the integration of the business remains on track, the company said, with about $31 million in cost savings realized in the fiscal year. But some of the brands, such as Birds Eye, Duncan Hines and Wish-Bone, have had issues and the company said earlier this year they all needed innovation.
The company is trying to lean into food trends, including expanding its manufacturing capacity for its vegetarian Gardein brand as plant-based demand grows. It has also made on-trend changes to its Marie Callender’s line, like switching from trays to bowls and simplifying its ingredients, but was undercut on price by competitors, Connolly said.
Share Reaction
- The shares were fell as low as $25.06 in New York. The stock has been volatile this year. Through the close Wednesday, it was up 35%, beating the 16% gain in the S&P 500 Index.
Read More
- For more details on the results, see here.
- For the company’s statement, click here.
--With assistance from Karen Lin.
To contact the reporters on this story: Deena Shanker in New York at dshanker@bloomberg.net;Cécile Daurat in Wilmington at cdaurat@bloomberg.net
To contact the editors responsible for this story: Anne Riley Moffat at ariley17@bloomberg.net, Jonathan Roeder
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