Conagra Brands' Consumer Behavior and Financial Outlook

2024-01-24

Conagra Brands recently held its earnings call to discuss the company's business performance and provide updates to investors. The call featured speakers Sean Connolly, the CEO of Conagra Brands, and Dave Marberger, the CFO of Conagra Brands. They covered a range of topics, including the current consumer behavior in the U.S. that was impacting the company, the improvement in volume trends in the frozen business segment, the company's goals for the second half of the fiscal year, and more.

During the call, one of the key topics discussed was the consumer behavior in the U.S. that was affecting Conagra Brands. The current consumer behavior was characterized by value-seeking tactics when shopping, which put pressure on volume and mix for the company. However, Conagra Brands had been investing in key businesses, particularly in their largest Frozen business, to assess consumer response to increased brand building stimulus. This investment resulted in significant lifts and gains in market share, with the company's share in the frozen business approaching 51% in Q2.

The speakers also discussed the company's goals for the second half of the fiscal year. Conagra Brands aimed to continue building momentum with consumers and enter fiscal year 2025 in a position of strength. They planned to smartly invest in merchandising and advertising to support their brands and drive growth. The company was focused on targeting consumers in a very focused way with a focus on quality and superior relative value.

In terms of financial performance, Conagra Brands reported a decrease in organic net sales in Q2, primarily driven by the consumer dynamics and the reprioritization of food choices due to inflation. However, the company's targeted investments in the second quarter helped cut the total domestic retail volume decline in half compared to the first quarter. The international business also showed growth, with organic net sales increasing by 5.6%, and the foodservice segment saw organic net sales growth of 4.3%.

Looking ahead, Conagra Brands provided guidance for fiscal year 2024, including an organic net sales decrease between 1% and 2% compared to fiscal year 2023, an adjusted operating margin of approximately 15.6%, and an adjusted EPS between $2.60 and $2.65. The company expected to face challenges such as inflation, but they were confident in their ability to navigate the current environment and deliver strong results.

Overall, the Conagra Brands earnings call covered important topics related to the company's business performance, consumer behavior, investments, and financial outlook. The speakers provided insights into the challenges and opportunities facing the company and outlined their strategies for success in the coming months and years.