Conagra CEO Sees New Consumer Behaviors Lasting 'Well Into the Future'
By Annie Gasparro
Conagra Brands Inc. said it is investing in added manufacturing
capacity and marketing, aiming to maintain pandemic-driven sales
The coronavirus pandemic has brought big food companies back
into millions more homes, giving Conagra and its peers a chance to
win over consumers who had dropped their brands for newer or
Companies such as Campbell Soup Co. and General Mills Inc. also
have said they want to capitalize on the momentum by investing in
marketing and added production capacity.
Conagra Chief Executive Sean Connolly said Thursday that he
expects the new enthusiasm for cooking and packaged foods to
continue "well into the future." That has prompted Conagra to add
more production capacity for popcorn and some frozen meals.
"Critical to our ability to sustain our growing relevancy with
consumers is the physical availability of our products," he said on
a conference call. Conagra is also spending money on marketing and
to modernize some of its recipes and packaging.
Mr. Connolly said consumers, especially younger ones, would
likely continue eating at home more as they have developed skills
in the kitchen and work remotely more often. That would boost
Conagra's grocery business, though the company said it expects its
sales to food-service outlets would continue to struggle.
In its latest quarter, Conagra's sales rose 8% on a comparable
basis. The company said its Marie Callender's frozen meals, Orville
Redenbacher popcorn and Duncan Hines cake mixes have benefited from
people eating more at home. Conagra said it expects comparable
sales for the current quarter to rise 6% to 8%.
Shares of Conagra fell 2% to $35 on Thursday. Conagra's shares
were up 6.6% over the past year through Wednesday, compared with
2.2% for the packaged-foods and meats index, and 15% for the
Demand for packaged foods at grocery stores has moderated since
the beginning of the pandemic last spring. Still, sales growth at
many companies is at least quadruple levels they reported before
Credit Suisse food analyst Robert Moskow said in a note to
investors this week that Conagra might be too optimistic about the
potential for brands such as Chef Boyardee and Duncan Hines that
were unpopular before the pandemic to maintain sales momentum after
Conagra's projected operating margin for its ongoing quarter was
lower than analysts expected. Some, including Mr. Moskow, have
questioned Conagra's decision to spend more on nontraditional
advertising such as social media.
Mr. Connolly said higher-quality foods with more provocative
marketing will sell better than outdated foods that aren't marketed
well online. He said that in the latest quarter, Conagra gained
Overall for the quarter, which ended Nov. 29, Conagra reported a
6.2% rise in sales to about $3 billion. Its profit rose to $380
million from $262 million a year earlier. The company's adjusted
profit of 81 cents a share beat the 74 cents a share analysts
(END) Dow Jones Newswires
January 07, 2021 11:11 ET (16:11 GMT)
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