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News

Conagra Profit Warning

09/03/2020 - François-Xavier Branthôme
Conagra Brands lowers forecast on weak consumption trends

Conagra Brands stock fell nearly 8% after the maker of staple food brands such as Hunt's and Chef Boyardee saw weak orders from restaurants in the holiday season and soft retail sales in January - spurring it to cut its fiscal full-year profit forecast. 

 The unexpected drop for the likes of Hunt's tomato paste and Chef Boyardee canned ravioli prompted the Chicago-based company to cut its full-year adjusted per-share earnings forecast by 4% to USD 2.04 a share, below the USD 2.11 share analysts had been expecting. Sales for fiscal 2020 are now seen rising by approximately 10% to USD 10.52 billion vs. previous guidance of 12.7% growth and sales of USD 10.75 billion. Organic net sales should rise by roughly 0.3%, down from 1.3%, the company said.

Management had expected tough year-over-year comparisons in its fiscal third quarter, which ends on Feb. 23, but the difficulties in certain categories ran deeper than anticipated, CEO Sean Connolly said. “While we planned for tougher year-over-year comparable results in the third quarter, we did not plan for this level of category softness,” CEO Sean Connolly said in a statement.

The company said it remains committed to achieving its fiscal 2021 leverage goal and fiscal 2022 financial targets. Mr. Connolly recently provided additional comments on the unexpected headwinds experienced during the company’s third quarter: “The encouraging piece to the extent you have to live through a dip like this is that we’ve gained share in the categories that matter most to us indicating our brand health, but that share gain was not enough to hold the year, and it’s impacted our guidance,” Mr. Connolly said. “But again, our recent data suggests that this is an air pocket, and it seems to be abating.”

The company’s performance was affected by broad-based softening, even in some of its key growth categories that have enjoyed consistent growth for an extended period of time, Mr. Connolly said, citing frozen single-serve meals, frozen vegetables and sides and canned tomatoes as examples.
 
Source: thestreet.com, foodbusinessnews.net
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