By Emon Reiser
Shares for Conagra Brands were on the decline after the packaged food company reduced its guidance due to supply chain constraints on frozen chicken and vegetables.
The stock fell 7.4% to $23.41 in Tuesday morning trading. Shares are down nearly 16% year to date.
Conagra reported service interruptions during the third quarter that will lower volume, net sales and profit in the second half of the fiscal year. The company said its organic net sales are expected to fall 2% compared with previous guidance of between flat growth and a decline of 1.5%
Headwinds from foreign exchange rates will reduce the company's expected adjusted earnings per share to about $2.35 for fiscal 2025, down from previous guidance of between $2.45 to $2.50.
Conagra said it experienced manufacturing challenges at the primary facility where it prepares and cooks chicken used in frozen meals. The company said it temporarily stopped production and then restarted at a slower pace to restore product consistency. It also tapped third-party manufacturers to support its inventory in the meantime.
Conagra also said consumption growth rates on its frozen vegetable business, which includes Birds Eye, nearly doubled year over year through December and early January. The higher-than-expected demand depleted inventory and led to stores being out of stock. In response, Conagra reduced its volume by putting its customers on a strict product allocation and reduced merchandising from January through in an effort to boost its inventory ahead of the Easter holiday.
"While we've faced recent challenges servicing that demand, our investments in infrastructure and strategic partnerships position us for long-term success," said Chief Executive Sean Connolly.
Conagra's portfolio of goods includes Marie Callender frozen meals and non-frozen foods such as Duncan Hines cake mixes, Chef Boyardee canned meals and Slim Jims.
Write to Emon Reiser at emon.reiser@wsj.com
(END) Dow Jones Newswires
February 18, 2025 10:41 ET (15:41 GMT)
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