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By Ananya Mariam Rajesh
(Reuters) -Conagra Brands missed Wall Street expectations for third-quarter sales and profit on Thursday, hurt by softening demand for its snacks and supply-chain disruptions in frozen food and refrigerated business.
The Slim Jim maker is facing a double whammy of slowing sales growth as budget-conscious Americans switch to cheaper private-label brands, and manufacturing challenges at one of its primary facility, which prepares and cooks chicken used in frozen meals, impacting its ability to meet demand.
"While shipments lagged consumption largely due to discrete supply constraints we announced in February, we are making solid progress in restoring inventory and improving customer service levels," CEO Sean Connolly said.
The company's overall volumes decreased 3.1% during the quarter, while average prices fell 2.1%.
Conagra has been cutting product prices and offering promotions to keep demand intact. But the company, along with some of its peers, has been facing slowing demand, mainly for snacks, in an uncertain economy.
General Mills, Kraft Heinz and Campbell's have all issued bleak annual forecasts on strained consumer spending, which took a further hit after U.S. President Donald Trump's erratic tariff decisions fanned worries of prices shooting up again.
"With national brands already experiencing a drop in demand, its (Conagra) supply-chain issues are salt in the wound," said Emarketer analyst Blake Droesch.
"This puts the company in a vulnerable position heading into the rest of the year, where its challenges are likely to be compounded by the impact of tariffs."
Conagra said it expects limited impact to fiscal 2025 from previously announced U.S. tariffs on steel and aluminum and imports from China. It also kept its annual forecasts unchanged.
Shares of the packaged food company rose 3.6% in early trading.
Conagra's third-quarter net sales fell 6.3% to $2.84 billion. Analysts estimated $2.90 billion, according to data compiled by LSEG.
It posted adjusted earnings of 51 cents per share, missing expectation of 53 cents.
(Reporting by Ananya Mariam Rajesh in Bengaluru; Editing by Shilpi Majumdar)
