- ConAgra warned that poor performance by a number of key brands, combined with continued difficulties combining its private-label businesses, will weigh down earnings through the fiscal year.
- The Omaha-based food conglomerate put much of the blame on difficulties integrating private-label manufacturer Ralcorp Holdings with other units. ConAgra completed a $5 billion purchase of Ralcorp a year ago.
- Also singled out for their poor performances were the Orville Redenbacher’s, Healthy Choice, and Chef Boyardee brands.
Wall Street seemed shocked by ConAgra's revised forecasts. Shares in the company fell more than 6% on the news.
But the most shocking thing in yesterday's announcement was that anyone would be shocked.
We don't mean to belittle ConAgra's challenges, but let's be serious for a moment. Does anyone think brands such as Chef Boyardee are coming back? It's pasta in a can! People aren't even eating soup in cans anymore! And the Ralcorp purchase with all its promised synergies and cost-savings is taking longer than hoped? No kidding! Hasn't anyone ever worked in a massive corporation before? Big acquisitions always take longer than expected to integrate. Just the resulting turf wars of middle managers can eat up a year of productivity.
We've applauded ConAgra in the recent past for its efforts to do things like cutting sodium to better reflect tastes in 2014. But our sense is that the company faces a long, uphill battle — and it must fight those battles with weapons from the '80s (Healthy Choice frozen meals!) and an army full of executives who fear their jobs will become redundant or their brands will die.
It won't be easy.