Conagra Brands has trimmed its annual profit forecast on signs that price reductions on its products across grocery, snacks and frozen food items to spark demand will weigh on its margins.
Customers, wary of higher grocery prices, have turned to cheaper private label brands, hurting sales at packaged food companies including Conagra and General Mills.
In response, Conagra, which typically caters to more financially strapped customers, has lowered prices and ramped up promotions to reverse the demand slowdown over the past few years.
Higher-than-anticipated inflation and a stronger dollar are also expected to hurt its business in the back half of the year, CEO Sean Connolly said in a statement.
Quarterly Highlights
Conagra said it gained volume share in the snacking and staples categories including microwave popcorn, shelf-stable dinners and entrees, chili, and seeds, driving a 2% rise in the grocery and snacks segment's sales during the quarter.
The packaged food giant now expects fiscal year 2025 adjusted profit per share in the range of $2.45 to $2.50, compared with its prior target of between $2.60 and $2.65.
It also lowered its adjusted operating margin forecast to about 14.8%, from a range of 15.6% to 15.8%.
The company posted a smaller-than-expected drop in second-quarter sales as price cuts across its categories helped prop up demand which has slowed over the last few years.
Net sales came in at $3.20 billion for the three months ended 24 November, compared with analysts' average estimate of $3.15 billion, according to data compiled by LSEG.
Earlier this month, it was reported that the maker of Slim Jim beef jerky and Healthy Choice frozen meals is looking to sell its popular canned pasta brand Chef Boyardee, according to people familiar with the matter.
