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Lingering supply chain issues and soaring freight and ingredient costs have eaten into Conagra’s profit margins, even as it raised product prices several times over the past year.
As decades-high inflation pinches spending at American households, top retailers have also warned that more consumers are turning to cheaper private-label products, hurting demand at Conagra.
Conagra, known for brands such as Birds Eye and Chef Boyardee, said its volumes fell 6.4% in the fourth quarter, as consumers showed signs of pushing back against price increases.
The more-than-a-century-old company said it expects volumes to take a bigger hit in fiscal 2023 as it undertakes price hikes to mitigate higher costs, which the company anticipates will remain elevated through the year, sending shares down about 3.3% in premarket trade.
Conagra said it expects full-year adjusted profit per share to grow by 1% to 5% compared with analyst expectations of an 8.26% growth, as the packaged food maker anticipates gross inflation in the low-teen percentage range for the year.
Net sales rose 6.2% to $2.91 billion in the fourth quarter ended May 29, missing analysts’ average estimate of $2.93 billion, according to Refinitiv IBES data.
Net income attributable to Conagra declined to $158.9 million, or 33 cents per share, from $309.5 million, or 64 cents per share, a year earlier.
Excluding one-time items, the Chicago-based company earned 65 cents per share, above estimates of 63 cents per share.
