Conagra Brands fell short of Wall Street estimates for first-quarter results as budget-conscious consumers switched to lower-priced alternatives over the company's pantry staples.
US packaged food companies are wrestling with the fallout of multiple price hikes since the pandemic that have pushed some shoppers to opt for cheaper private-label brands.
The frozen meals and Slim Jim beef jerky maker's total organic sales volumes fell 1.6% in the quarter after decreasing 1.8% in the fourth quarter.
Volumes at the grocery and snacks unit, which accounts for most of Conagra's revenue, dropped 1.8%, while they fell 11.1% in its foodservice segment.
"Drastic changes in consumer shopping habits seen in the past few years are likely to be more permanent than previously thought," eMarketer analyst Blake Droesch said.
Outlook
Conagra reaffirmed its annual forecasts even as it anticipated a challenging consumer backdrop.
The company expects to be able to manage through any disruptions from the dockworkers strike on the US East Coast without any significant impact, CEO Sean Connolly told Reuters.
It has worked with suppliers in advance but a protracted disruption would be a bigger issue, he said.
The company's first-quarter net sales fell 3.8% to $2.79 billion. The average analyst expectation was $2.84 billion, according to data compiled by LSEG.
Conagra also cited a $27 million hit to results from temporary manufacturing disruptions in its Hebrew National hot dog business.
The company's adjusted profit of 53 cents per share missed estimates of 60 cents. Quarterly gross margin fell 189 basis points to 26.5%.
Last month, peer General Mills reported a smaller-than-expected drop in quarterly sales as it benefited from price cuts on some of its products.
