Chicago, Illinois-headquartered Conagra Brands on July 13 reported net sales slippage of 16.7%, and an organic net sales decrease of 10.1% in the fourth quarter, driven by lapping the prior year’s significant surge in at-home food consumption at the onset of the Covid-19 pandemic. On a two-year compounded annualized basis, however, fiscal 2021 fourth quarter net sales increased 2.4% and organic net sales increased 4.5%.
For the full fiscal year, net sales increased 1.2% to $11.2 billion. The growth in reported net sales primarily reflects a 2.0% net decrease from sold businesses, which include Lender’s frozen bagels, the Direct Store Delivery (DSD) Snacks business, the H.K. Anderson business, the Peter Pan peanut butter business, the private label peanut butter business, and the Egg Beaters business, which was sold at quarter end. Other factors were a 1.9% decrease from the impact of last year’s 53rd week, and a 5.1% increase in organic net sales.
Net sales for the Refrigerated & Frozen segment in Q4 fell by 12% to $1.2 billion in the quarter reflecting a 0.2% decrease from the impact of sold businesses, a 6.3% downturn from the impact of last year’s 53rd week, and a 5.5% decrease in organic net sales.
On an organic net sales basis, volume decreased 8.9% and price/mix increased 3.4%. The volume decline was due to lapping the prior year’s surge in at-home food consumption at the onset of the Covid-19 pandemic. The price/mix increase was primarily driven by favorable brand mix, as well as slight favorability in pricing. In the quarter, the Company gained share in categories such as frozen vegetables, whipped topping, frozen handhelds, and frozen appetizers.
Among the company’s frozen food brands are Healthy Choice, Birds Eye, Alexia, Blake’s, Gardein, Frontera, Bertolli, P.F. Chang’s, Hungry Man, Banquet and Marie Callender’s.
Input Cost Inflation Concern
Sean Connolly, president and chief executive officer of Conagra Brands, commented:
“As the fourth quarter unfolded, input cost inflation accelerated and we now expect fiscal 2022 input cost inflation to be materially higher than we anticipated at the end of fiscal Q3. In response, we have further enhanced the aggressive and comprehensive action plan already being executed, which includes broad-based pricing. While we are pleased with the initial results, there will be a lag between the time we are hit with higher costs and when we realize the benefits of our actions. The impact of this lag is expected to be most acute in the first half of fiscal 2022.
Connolly continued: “We anticipate second-half adjusted EPS to be in line with what we previously assumed within our prior fiscal 2022 guidance. The underlying strength of our business and our continued investments to further support our brands gives me confidence that we have a long runway of growth and shareholder value creation ahead of us. This confidence is underscored by our Board of Directors’ decision to increase our annual dividend by 14% after increasing it 29% last fiscal year. We look forward to discussing our longer-term outlook at an investor meeting in the spring of 2022.”
