Dive Brief:
- Conagra Brands reported an 11.5% drop in second-quarter revenue to $2.09 billion, which the company attributed to the impacts of divestitures, currency headwinds and a reduction in its use of discounts, according to a news release and The Wall Street Journal. That total missed analysts' expectations of $2.11 billion.
- Quarterly profit fell to $122.1 million, or $0.28 per share, compared with $154.9 million, or $0.35 per share, in the same period last year.
- "We expect to improve sales growth trends in the second half of the fiscal year as we begin to lap the pricing and trade actions we undertook last year," president and CEO Sean Connolly said in a statement. "Accordingly, we are reaffirming the fiscal 2017 guidance we provided at our investor day on Oct. 18, 2016."
Dive Insight:
This was Conagra Brands' first earnings report since the company officially spun off its Lamb Weston business and shed its ConAgra Foods name in November. The company has made a series of divestments and acquisitions in recent years to alter the direction of its portfolio and growth potential and to better align with surging demand for better-for-you food and beverage products.
Connolly described these efforts in a statement as focusing on "value over volume," which in part explains the reduction in the company's use of discounts. This strategy is likely a bid to attain "a higher quality revenue base," according to The Wall Street Journal. Instead of centering its efforts around higher volumes of less-profitable product sales, the company has shifted gears to hone in on products with higher profit margins and more relevance to today's consumers.
But unlike some of its competitors, such as Campbell, Conagra hasn't pushed to the perimeter with the same rigorous approach to adding fresh foods to its portfolio. Instead, Conagra seems to be embracing packaged foods while still enhancing its offerings within that category, similar to Kraft Heinz's approach to its own portfolio.