Updated version 4 - Conagra sales decline, new CEO Bresse works to address inflationary pressures

Key points and executive comments added to paragraphs 3 and 9, and share price updated

Koyena Das/Alexander Marrow

Reuters, Sept. 30 - Conagra Brands (CAG.N) reported on Wednesday that its first-quarter organic net sales declined, weighed down by lower volumes. High inflation and price-sensitive consumers have hindered new CEO John Brase's efforts to revive the packaged food company.

The company known for "Slim Jim" meat snacks saw its share price plunge more than 5.5% to the lowest level in over three months. Although, according to London Stock Exchange Group (LSEG) data, its first-quarter profit and sales both beat Wall Street expectations, the company reiterated guidance for fiscal 2027 organic net sales to decline 1% to 3% year-on-year.

"Consumers are indeed under pressure," Brase told Reuters. "There is no doubt about that."

In July, Conagra cut its annual dividend in half and said it was reviewing its non-core assets (link). Brase, who took over as CEO in June, said brands with little strategic significance could be divested while adding others to the portfolio.

Persistently high inflation—especially rising gasoline prices—and higher borrowing costs have put pressure on household budgets, pushing consumers toward cheaper private-label alternatives. At the same time, the rapid adoption of GLP-1 weight loss drugs is forcing packaged food manufacturers to adjust their product formulas to meet demand for healthier foods.

Chief Financial Officer Dave Marberger said in a pre-recorded statement that the company expects full-year volumes to decline by a mid-single digit percentage, “which reflects above-historical volume elasticity, especially in our frozen foods business.”

Conagra said that in the first quarter, pricing and product mix contributed 1% to total organic net sales, while volume fell 2.1%.

Lower volumes, inflationary pressures, and adverse operating leverage drove adjusted gross profit for the quarter down 3.9% to $619 million, a decline that was partially offset by a $4 million tariff refund.

Marberger said inflation in transportation is accelerating, as "our freight costs have been climbing sharply." He added that price trends for animal proteins—especially chicken, beef, and pork—were favorable.

Net sales in the refrigerated and frozen foods segment fell 2.1% from a year earlier for the quarter, with volume down 1% and pricing down 1.5%.

"The core challenges remain: volume has declined for six consecutive years. Management acknowledges the portfolio is too large and complex, while the current consumer environment leaves no room for pricing errors," RBC analysts wrote in a report.

The company’s quarterly net sales totaled $2.6 billion, slightly above the $2.59 billion estimate.

Adjusted earnings per share for the quarter were $0.41, compared to analysts' average estimate of $0.28.

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