Posted By Global Banking and Finance Review
Posted on December 19, 2024
(Reuters) -Conagra Brands on Thursday 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.
Shares of the Birds Eye frozen meals maker fell 1.4% before the bell, after having declined about 4% this year.
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.
"While momentum remains strong, we expect the business to be impacted by headwinds in the back half including higher than expected inflation and unfavorable foreign exchange rates," said CEO Sean Connolly.
The company posted a smaller-than-expected drop in quarterly sales as price cuts across its categories helped prop up demand which has slowed over the last few years.
It 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.
The packaged food giant posted net sales of $3.20 billion for the second quarter ended Nov. 24, compared with analysts' average estimate of $3.15 billion, according to data compiled by LSEG.
(Reporting by Savyata Mishra in Bengalurul; Editing by Maju Samuel)