David Paul Morris / Bloomberg / Getty Images of Conagra Brands products.
Conagra Brands (CAG), a leading food company, experienced a decline in its stock price on Thursday following a downward revision of its profit outlook for the remainder of the fiscal year. The company attributed this adjustment to a challenging consumer environment heavily influenced by persistent inflation.
CEO Sean Connolly explained that higher-than-anticipated inflation and unfavorable foreign exchange rates are expected to negatively impact the company’s earnings in the second half of the fiscal year. In response to these economic headwinds, Conagra has revised its full-year guidance. The company now anticipates organic net sales growth to land near the midpoint of its previous projection, which ranged from flat to a decline of 1.5%. Furthermore, Conagra has reduced its adjusted earnings per share (EPS) forecast to a range of $2.45 to $2.50, down from the previous estimate of $2.60 to $2.65.
This is not the first time Conagra has highlighted the challenges posed by the current economic climate. The company has consistently acknowledged a hesitant consumer base in recent quarters and has implemented cost-cutting measures to mitigate the impact of these economic pressures.
Despite these challenges, Conagra reported second-quarter revenue of $3.2 billion. While this figure represents a slight year-over-year decrease of approximately 0.4%, it surpassed analysts’ expectations of $3.15 billion, according to data compiled by Visible Alpha. However, the company’s net income fell short of projections, declining to $284.5 million compared to the anticipated growth to $317.7 million.
Excluding one-time costs such as restructuring charges, Conagra reported adjusted net income of $337 million, exceeding analysts’ projections of $323.1 million.
Following the announcement, Conagra’s shares experienced a decline of nearly 2% on Thursday afternoon, contributing to a year-to-date loss of approximately 6%.
In conclusion, Conagra Brands is navigating a challenging economic landscape characterized by persistent inflation and cautious consumer spending. While the company’s second-quarter revenue exceeded expectations, the lowered profit outlook reflects the ongoing pressures facing the food industry. Conagra’s strategic adjustments, including cost-cutting initiatives, aim to address these challenges and position the company for long-term success.
