Chicago, Illinois, U.S.A.-based packaged food company Conagra has lowered its earnings forecast for its 2025 fiscal year again, citing supply constraints and other obstacles.
After originally lowering the forecast in December 2024, executives at Conagra, the maker of Van de Kamp’s, Mrs. Paul’s, Healthy Choice, and other major frozen food and snack brands, said on 18 February that they were lowering it another notch, specifically dropping its organic net sales forecast by 2 percent.
Prior guidance placed organic net sales to remain flat at best and decline 1.5 percent at worst, but the persistent challenges have forced the firm to shift the forecast down to a 2 percent drop. Additionally, earnings per share have dipped from between USD 2.45 (EUR 2.35) and USD 2.50 (EUR 2.40) to USD 2.35 (EUR 2.25) per share in the new guidance.
“The company has experienced customer service interruptions during the third quarter [of the 2025 fiscal year] due to supply constraints on two product platforms: frozen meals containing chicken and frozen vegetables,” the company said. "In addition, foreign exchange rates are now expected to provide a further headwind to adjusted earnings per share.”
Those Q3 customer service interruptions included issues at the primary facility that prepares and cooks chicken used in Conagra frozen meals.
“When the company began to see product quality inconsistencies coming off the production lines, it promptly took corrective action. This included temporarily stopping production, implementing operational adjustments, and restarting at a slower pace to restore product consistency,” Conagra said, while adding that it utilized third-party manufacturers to fill gaps where possible. “While these actions enabled the company to resume production that meets our strict quality standards, the net impact of this issue is lower volume, net sales, and profit in the second half of the fiscal year.”
Further constraining supply, consumption growth rates in Conagra’s frozen vegetable business nearly doubled through December and early January compared to the previous year, which led to stores running out of stock.
“In turn, the company put customers on a strict product allocation and reduced merchandising from January through March 2025 in an effort to rebuild inventories ahead of the Easter holiday. The net effect is lost volume, primarily in the third quarter of fiscal 2025,” Conagra said...
