Dive Brief:
- ConAgra Foods reported a 0.6% lift in fiscal third quarter sales to $2.92 billion, which topped analysts' estimates.
- Quarterly profit soared year over year to $204.6 million, as compared to a loss of $954.1 million in the same period last year. This was ConAgra's first quarterly report with its private-label brands business off the books (after divesting it to TreeHouse Foods last year), a business that had driven down profits in previous quarters.
- While ConAgra has been focusing on healthy, natural, and gourmet products that tend to be more profitable, the company's sales bump is credited in part to 6.1% sales growth in its commercial foods business, particularly its Lamb Weston frozen potato products.
Dive Insight:
In addition to the private-label divestment, ConAgra's profits have also been led by cost-cutting measures and operational efficiency. This has meant significant job cuts, including about 30% of the company's office-based workforce, with expected savings generation of about $300 million over the next three years, as of the October announcement.
To help further streamline the company's focus, ConAgra also spun off its foodservice and Lamb Weston business from the consumer-facing grocery products business last year. This has enabled ConAgra to revamp stagnant brands with better-for-you offerings, like Hunt's organic tomato products, which help the company maintain competitiveness in a fast-changing market.
Aside from turning its existing brands into power brands, which analysts have suggested ConAgra lacks, the company has also made strategic acquisitions in the better-for-you foods space, including Blake's All Natural Foods. Earlier this year, ConAgra CEO Sean Connolly recognized the company's need for more competitive brands and more innovation in product development and marketing to get there.
ConAgra's stock price has been on the rise, having increased nearly 8% year to date and 19% in the past 12 months, according to Associated Press. That's compared to a 1% rise in the S&P 500.