CAGNY: Conagra Deals With New Manufacturing Disruptions

In his presentation at the Consumer Analyst Group of New York meeting, Conagra CEO Sean Connelly convincingly said the company had a perfectly positioned product portfolio, with increasing reliance on frozen foods and snacks –often frozen snacks. Great categories to be in. And with 91% of sales coming domestically, the company is shielded from any trade wars but also has growth potential if it chooses to expand internationally.

But when Chief Financial Officer Dave Marberger took over, he divulged more manufacturing disruptions, a problem the company had at the height of last summer’s grilling season with Hebrew National.

This year, it was a production problem at the primary facility that cooks chicken used in Conagra’s many frozen meals. It forced the company to buy meat from a third-party supplier, raising expenses. Also, “We were unable to service all of our demand in the third quarter, which will negatively impact both our sales and profit for fiscal 2025,” Marberger said.

Marberger also walked back previous full-year guidance, saying organic sales are expected to decline by 2% (vs previous guidance of zero to minus-1.5%), and earnings per share will be $2.35 (vs. previous guidance of $2.45 to $2.50 per share).

Just after the CAGNY meeting, Conagra shares fell 7.7%.

Other than that, things are great.

The frozen category is growing, and 79% of Conagra’s offerings come with better-for-you attributes. Many include call-outs to GLP-1 drug users. Connelly claimed beef sticks are the fastest growing grocery category, and in addition to its legacy Slim Jims, the company last August acquired Fatty Smoked Meat Sticks, and in 2017 bought Duke’s.

Chef Boyardee is out of the can with frozen entrees in pouches. Vlasic Pickle Balls are capitalizing on the growing sport as well as the current interest in pickles. Angie’s Boomchickapop, once a popcorn-only brand, now has frozen pops.