Conagra Brands forecast annual revenue and profit below estimates after missing quarterly revenue expectations, as high living costs prompted cash-strapped shoppers to turn to cheaper alternatives for their at-home meals.
The packaged food industry has been struggling with lacklustre volume recovery as higher living costs have squeezed budgets, forcing cost-conscious consumers to look for even cheaper alternatives despite preferring to eat at home over dining out.
Despite reducing product prices to attract more cautious spenders, the maker of Slim Jim beef jerky still experienced sluggish demand in its frozen food and snacking businesses.
Conagra's total volumes decreased 1.8% in the fourth quarter after falling 7.7% last year.
'Challenging Industry Trends'
"Looking ahead, we expect a gradual waning of the challenging industry trends seen throughout fiscal year 2024, as consumers adapt and establish new reference prices," CEO Sean Connolly said.
The company expects fiscal-year 2025 organic sales to decrease between 1.5% to flat, compared with analysts' estimates of 1.54% rise, as per LSEG data.
The company beat quarterly estimates for profit but forecasts fiscal 2025 profit below estimates.
The Healthy Choice cereal maker expects annual profit per share to be in the range of $2.60 to $2.65 compared to analysts' estimates of $2.69 per share.
"National food brands like those in the Conagra portfolio face a tough road ahead," said Blake Droesch, analyst with eMarketer. "If a consumer adopts more budget-friendly shopping habits, they are unlikely to immediately return to their old ways once inflation stabilises."
Conagra Brands reported net sales of $2.91 billion (€2.68 billion) for the quarter ending 26 May, below analysts' average estimates of $2.93 billion (€2.70 billion), according to LSEG data.
Connolly added, "Our investments in our brands continued to yield results, and again drove volume improvement in our domestic retail business. Progress was most notable in our key frozen and snacks domains, where we also saw market share gains."
News by Reuters, additional reporting by ESM.
