Dive Brief:
- ConAgra announced a profit of $154.9 million for the second fiscal quarter 2016, up from $10 million in the same period last year, though profit in fiscal Q2 2015 was reduced by a $203 million loss from discontinued operations. Revenue declined by 1.4% to $3.09 billion, missing analysts' expectations.
- Both the consumer foods and commercial foods segments reported double-digit growth in operating profits, the former thanks to "favorable price/mix, strong net productivity, and lower commodity input costs [that] more than offset increased marketing investment and the unfavorable impact of foreign exchange," according to a news release. Sales for consumer foods fell by 2.9% due to a 3% volume decrease that offset sales growth.
- ConAgra said the sale of its private-label brands business, which was dragging down profits, to TreeHouse Foods is expected to close in early 2016.
Dive Insight:
In the first half of the fiscal quarter, ConAgra announced the sale of its private-label brands, the relocation of its headquarters from Omaha to Chicago, the rollout of its cost-reduction initiatives, a split into two companies, consumer brands and commercial foods (Lamb Weston), and a number of job cuts.
"The bold moves we’re making are positioning us well to deliver long-term shareholder value," ConAgra president and CEO Sean Connolly said in a statement.
This amount of changes demonstrates a company in the midst of a complete overhaul meant to make ConAgra more competitive and its brands more relevant in a changing marketplace. Earlier this month, Connolly said of ConAgra's competition, "We've got to change with them," noting that the food industry breeds winners and losers with not much in between, reported the Omaha World-Herald.
A Technomic executive recently commented to the Omaha World-Herald that ConAgra has too many brands and lacks the "power brands" necessary to compete in today's food industry.
"I think we're seeing the lining up of a battle of really giant consumer product brands," Kelly O'Keefe, a branding expert and professor at Virginia Commonwealth University, told Food Dive in November after the company spinoff.
Last quarter, the company reported a net profit loss of $1.24 billion due to charges related to the reclassification of ConAgra's private brands sector as discontinued operations.