Conagra Brands (CAG) reported mixed fiscal second-quarter earnings results, cutting its sales and profit guidance for 2024. Yahoo Finance Reporter Brooke DiPalma breaks down Conagra CEO Sean Connolly's comments on shifting consumer spending in an inflationary environment from the food brand's earnings call.
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Editor's note: This article was written by Luke Carberry Mogan.
Video Transcript
RACHELLE AKUFFO: Shares of Conagra trending on Yahoo Finance this morning after the company posted mixed results in its fiscal second quarter earnings results, but cut its fiscal 2024 guidance based on slower than expected volume recovery. Let's bring in Yahoo Finance's Brooke DiPalma to give us those details. Hey, Brooke.
BROOKE DIPALMA: Good morning, Rachelle. Conagra Brands certainly under pressure this morning after the company updated its fiscal 2024 guidance as it continues to expect slower pace of recovery. It also said that it wanted to directly reflect the results that it's seen so far. The company now expects adjusted earnings per share to be in the range of $2.60 to $2.65.
That's compared to a prior projection of $2.70 to $2.75. Now it does also expect organic net sales to decrease this year in the range of 1% to 2% compared to its earlier forecast to grow about 1%. Now this did get lots of buzz on the earnings call. Many investors asking many questions.
And on the call, CEO Sean Connolly, he did provide some color to investors. Take a listen.
SEAN CONNOLLY: The macro environment that we talked about in Q1, I mentioned again today, it persisted into Q2, so we've just seen fewer purchases in our first half than we would have assumed at the beginning of the year. So that's part of the call down the top line. The second part of it is I don't want to sign us up, at this point, for any kind of heroic volume recovery in the back half of the year.
Because I think the mood of our investors is let's be prudent, let's be up the middle of the fairway, let's put some targets out there that are not making any grand assumptions that we can meet or beat.
BROOKE DIPALMA: Now as this continues as they're taking this all into consideration, the company is announcing new advertising investments focused on their biggest brands, which many of them, household names, so think Birds Eyes-- Birds Eye, Healthy Choice as well as Slim Jim. The company also focused on innovation.
Sean Connolly saying on the call that fiscal 2024 is one of the biggest innovations slates yet. They're pointing to that canned Wendy's chili that came out in April, certainly hoping that brings consumers in to try and seek new options since they're pulling back on those known names.
RACHELLE AKUFFO: It's true. Really trying to get a gauge on the consumer, and of course, Brooke, as consumer behavior shifts, they seem to continue. It is directly impacting volumes and price mix. What did the company say about that?
BROOKE DIPALMA: Yeah, well we do continue to see negative volume this past quarter, volume decreased by 2.9% largely led by grocery as well as their fridge, and frozen food business. Now this does come as consumers continue to shift what they're buying, they're looking to do more scratch cooking, so that ultimately means buying, say, beef and rice and making more of a larger meal and they're pulling back on those single serve.
We did see that somewhat improve in the frozen food aisle this past quarter from Conagra Brands, but they do have lots of investments moving into the second half of the year. They did note that as an experiential consumer shifted to more experienced options, they're pulling back on perhaps spending more on these key items and going to more private label options in the food aisle.
And so certainly lots of momentum moving into 2024, but lots of recovery ahead that needs to be done.
RACHELLE AKUFFO: That's interesting. I know we've talked about the snack environment so interesting to see some of the new ones showing up here as well. Appreciate you breaking that down. Our very own Brooke DiPalma.
