ConAgra reports weakness in private brands

Food giant ConAgra Foods recently posted a net loss in the latest quarter due to weakness in its private brands business. However; the company also raised its full-year forecast on the belief that improvements will be made. The consumer packaged goods company is a major supplier to Wal-Mart with a large sales office in Northwest Arkansas.

ConAgra CEO Gary Rodkin said the performance in private brands was “significantly below expectations,” but the company should see improvement in fiscal 2016 from initiatives to boost execution.

The company said Sean Connolly, former CEO of Hillshire Brands, began his role as CEO-elect this month and becomes CEO on April 6.

The private brands business posted an operating loss of $1.3 billion due to the write-down of goodwill and other intangible assets following deterioration in the business during the quarter. Volume declines across most categories and higher commodity costs dragged on results, the company said.

ConAgra reported a net loss of $954.1 million, or $2.23 per share, in the fiscal third quarter, compared with a profit of $234.3 million, or 55 cents per share, a year earlier. Sales fell 1.8% to $3.88 billion.

In the third quarter, consumer foods volume was flat, while sales of commercial foods grew modestly, the company said.

Chef Boyardee, Hebrew National, PF Chang’s and Slim Jim were among the brands posting sales growth for the quarter. Sales in the division declined 2% overall to about $1.8 billion, due to lower pricing and the impact of foreign currency translations.

The company said it is working on packaging, assortment, product and merchandising initiatives to improve the performance of Chef Boyardee, Healthy Choice and Orville Redenbacher.

The commercial foods unit reported a 1% rise in sales to $1 billion, as the West Coast port labor dispute and challenges facing quick-serve restaurants in Asian markets dampened international results.