Duncan Hines, Birds Eye and Slim Jim parent sells less, even at lower prices

By Tomi Kilgore

Conagra's stock tumbles toward biggest selloff in more than four years after quarterly profit and sales miss expectations

Shares of Conagra Brands Inc. took a deep dive on Wednesday after the maker of frozen foods and snacks suffered a rare quarterly profit miss, as sales were hurt by declines in pricing and volumes.

The company, whose brands include Birds Eye, Duncan Hines, Slim Jim and Hunt's, said that results were hurt by a temporary manufacturing disruption in its Hebrew National business during the key grilling season.

Despite the quarterly earnings miss, the company said it gained market share across its portfolio, and it affirmed the full fiscal-year outlook it provided in July.

The stock (CAG) tumbled 9.4% in morning trading toward a 10-week low, which puts it on track to suffer the biggest one-day selloff since it dropped 10% on March 12, 2020.

Conagra reported net income for the quarter to Aug. 25 rose to $466.8 million, or 97 cents a share, from $319.7 million, or 67 cents a share, in the same period a year ago.

Excluding nonrecurring items, adjusted earnings per share increased 20% to 53 cents but was below the FactSet consensus of 60 cents. That miss snapped a 10-quarter streak of bottom-line beats.

Sales fell 3.8% to $2.79 billion, below the FactSet consensus of $2.84 billion. Sales were hurt by a 1.9% decline in price and mix and a 1.6% decrease in volume.

For Conagra's business segments, grocery and snacks sales fell 1.7% to $1.2 billion, with price/mix easing 0.1% and volume falling 1.8%.

Refrigerated and frozen sales were down 5.7% to $1.1 billion, with price/mix lower by 5.8% to offset a 0.1% increase in volume.

Elsewhere, international sales slipped 0.4% to $259 million and food-service sales were down 7.8% to $267 million.

Looking ahead, the company affirmed its fiscal 2025 guidance for adjusted EPS of between $2.60 and $2.65 and its outlook for organic sales growth of negative 1.5% to flat.

But the company lowered its full-year guidance for capital expenditures to $450 million from $500 million and raised its estimate for input cost inflation to roughly 3.2% from 3%.

The stock has now edged up 3.4% year to date, while Consumer Staples Select Sector SPDR ETF XLP has rallied 13.9% and the S&P 500 index has advanced 19.6%.

-Tomi Kilgore

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10-02-24 1103ET

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