Conagra Brands, which sports frozen seafood brands Van de Kamp’s and Mrs. Paul’s along with major brands Healthy Choice and Bird’s Eye, lowered its outlook for 2024 after disappointing sales and earnings in its most recent fiscal quarter.
The Chicago, Illinois, U.S.A.-based supplier reported that its gross profit plunged 8.2 percent to USD 847 million (EUR 774 million) in fiscal Q2 2024, while organic net sales dropped 3.4 percent.
The sales decrease was driven by a 2.9 percent decrease in volume, primarily due to lower U.S. consumption trends and a 0.5 percent negative impact from price and product mix, partially attributable to an increase in strategic investments.
In the company’s earnings presentation, Conagra CEO Sean Connelly attributed the decline to shoppers limiting discretionary purchasing; actively reducing household inventories; an uptick in hands-on, at-home meal preparation; increased use of leftovers; and reduced purchasing of convenience items.
Conagra struggled throughout 2023, reporting in October that its fiscal first quarter 2024 net sales were flat compared to the prior year at USD 2.9 billion (EUR 2.7 billion), while organic net sales decreased by 0.3 percent.
The reason for the decline was a 6.6 percent decrease in volume, largely due to an “industry-wide slowdown in consumption and recent consumer behavior shifts,” the company stated.
While Conagra’s gross profit increased 14.3 percent in the quarter, that was primarily due to “inflation-driven pricing” that went into effect earlier in the year, the company stated.
Conagra’s refrigerated and frozen segment were hit the hardest by the downturn, reflected by a decrease of 5.8 percent in net sales in the quarter and a 14.2 percent drop in adjusted operating profit.
As a result, Conagra now expects its organic net sales to decrease between 1 percent and 2 percent in 2024 compared to fiscal year 2023, instead of increasing by 1 percent or more as previously forecast.
Conagra’s adjusted earnings and outlook align with what analysts believe will be a tough year for seafood and overall food sales.
Throughout the second half of 2023, overall U.S. frozen seafood sales and volume declined significantly. Specifically, in November 2023, frozen seafood sales plunged 10.9 percent, and volume fell 9.7 percent, despite a 1.3 percent decline in prices for that segment, per Circana and 210 Analytics.
Additionally, seafood harvesters, processors, wholesalers, and distributors continue to deal with the negative impacts of inflation coupled with rising interest rates on the overall seafood supply chain, according to a Wells Fargo Agri-Food Institute Industry Update.
Photo courtesy of Conagra
