Key Moments
- Despite a soft quarter, Conagra maintained its full-year sales and earnings guidance.
- However, the company reported a $663.6 million quarterly net loss. This loss stemmed from a $968 million non-cash impairment charge tied to a prolonged share price decline.
- Meanwhile, quarterly volumes dropped 3% and net sales fell 6.8% to $2.98 billion. Adjusted earnings per share reached 45 cents.
Outlook Steady Despite Soft Quarter
Conagra Brands on Friday left its full-year sales and profit targets unchanged after a subdued second quarter. The Slim Jim maker is navigating choppy demand for its packaged food portfolio amid strained consumer budgets and strong competition.
Additionally, the company, which also owns Hunt’s ketchup, reaffirmed that annual net sales should range between a 1% decline and a 1% increase. It also reiterated its forecast for annual adjusted earnings per share between $1.70 and $1.85.
Impairment Charge Drives Net Loss
Conagra swung to a net loss in Q2 after taking a $968 million non-cash impairment charge. The charge relates to a sustained drop in its share price. The company has lost nearly 40% of its market value over the past two years while managing supply chain disruptions, high ingredient costs, and subdued demand as cost-conscious consumers trade down to cheaper options.
For the quarter, Conagra posted a net loss of $663.6 million, compared with net income of $284.5 million a year earlier.
Operational Performance and Demand Trends
Quarterly volumes fell 3%, reversing a 0.4% gain from a year earlier. Net sales dropped 6.8% to $2.98 billion, in line with market expectations.
On an adjusted basis, Conagra delivered earnings per share of 45 cents, beating estimates by 1 cent.
| Metric | Current Quarter | Year-Ago Quarter |
|---|---|---|
| Volume change | -3% | +0.4% |
| Net sales | $2.98 billion | Not specified |
| Net income (loss) | -$663.6 million | $284.5 million |
| Adjusted EPS | $0.45 | Not specified |
| Impairment charge | $968 million (non-cash) | Not specified |
Sector Backdrop and Investor Sentiment
Conagra continues to face shifting consumer behavior, including a move toward healthier choices. The trend is amplified by the Trump administration’s “Make America Healthy Again” initiative and broader use of GLP-1 and other weight-loss drugs. Consequently, packaged food demand faces additional pressure.
Meanwhile, peers General Mills and Campbell’s have kept their annual forecasts unchanged amid economic uncertainty.
Against this backdrop, RBC Capital Markets analyst Nik Modi described Conagra’s valuation as appealing given subdued sentiment across the packaged food sector. “We believe shares will be tied to evidence of a sustained volume recovery.”
Tariffs and Cost Pressures
Conagra reiterated that tariffs could increase its cost of goods sold by roughly 3% annually, particularly for aluminum used in canned products. To manage this pressure, the company plans to adjust sourcing strategies and implement pricing actions where appropriate.
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