Conagra Brands' fiscal first-quarter results fell year over year and missed Wall Street estimates, impacted by lower volumes and price headwinds. The packaged food maker reported adjusted earnings of $0.53 a share for the three months through Aug. 25, showing a decline from $0.66 the year prior and below the Capital IQ-polled consensus of $0.60.
Sales decreased 3.8% year over year to $2.79 billion, trailing behind the Street's expectation of $2.84 billion. Following the announcement, the stock experienced a significant drop of 7.5% during trading on Wednesday. On an organic basis, sales dropped 3.5%, significantly influenced by a 1.9% negative impact from pricing amidst the company’s strategic investments during the quarter, alongside a 1.6% reduction in volume.
Additional challenges were observed with a reported impact of approximately $27 million due to temporary manufacturing disruptions in the Hebrew National business during the crucial grilling season. Chief Executive Sean Connolly emphasized, “Our team executed well to deliver on key priorities across the business during the first quarter in what continued to be a challenging environment.” He added that the domestic retail volume progressed in-line with expectations, with an increase in market share across the portfolio as they advanced their portfolio reshaping initiatives. In the grocery and snacks segment, sales saw a decline of 1.7% to $1.18 billion, influenced by reduced prices and volume.
The refrigerated and frozen division reported revenue drops of 5.7% to $1.09 billion due to a 5.8% drop in price and mix. International sales experienced a minor decline of 0.4% to $259.1 million, while the foodservice division faced a more pronounced drop, sliding 7.8% to $266.7 million. Looking ahead, Conagra maintains its projection for adjusted EPS to be in the range of $2.60 to $2.65 for fiscal 2025, while analysts are forecasting $2.61.
The company has also reiterated its full-year organic sales guidance, predicting a decline of 1.5% to flat compared to the previous year. Connolly reassured stakeholders, stating, “Overall, we are reaffirming our guidance for fiscal 2025, reflecting confidence in the underlying momentum of our business.” In terms of the current quarter, the company expects improvements in topline and volume sequentially, as articulated by Chief Financial Officer Dave Marberger in prepared remarks..