Shares of Conagra Brands (CAG) took a roughly 10% nosedive on Wednesday morning following the food giant's report of weaker-than-anticipated financials, attributed to a consumer spending decline. The company, which manufactures Slim Jim snacks and Duncan Hines cake mixes, reported a decrease in first-quarter adjusted earnings per share (EPS) for fiscal 2025 by nearly 20% to $0.53, with revenue similarly falling 3.8% to $2.79 billion. These figures undershot the consensus forecasts of analysts as per Visible Alpha.
The company witnessed a drop in organic net sales by 3.5%, which Conagra ascribed to a 1.9% negative effect from price/mix coupled with a 1.6% volume decrease. Temporary manufacturing disruptions at its Hebrew National operations during prime grilling season further affected results by approximately $27 million.
Conagra reported a 10% gross profit decrease to $739 million owing to lower organic net sales, inflated cost of goods sold, and unfavorable operating leverage. Conagra's CEO, Sean Connolly, admitted the company was navigating a persistently challenging environment.
In conjunction with the falling sales and adjusted profit, expenses skyrocketed by over 150% to $92 million, predominantly due to wage increases.
Despite confirming a fiscal 2025 organic net sales outlook projecting a 1.5% decrease to flat and adjusted EPS of $2.60 to $2.65, and maintaining a slight year-to-date increase, Conagra Brands' shares felt the impact of the day's drop.