CHICAGO — Conagra Brands management is focused on ensuring the company’s brands are available when consumers want them. In frozen, this may mean gaining shelf space by bringing more innovation to market. In snacks, it may include offering Angie’s Boomchickapop in coffee shops, Duke’s snacks on airplanes and David seeds in ballparks.
“Snacks are available everywhere and always within reach,” said Sean M. Connolly, president and chief executive officer, Sept. 27 during a conference call to discuss first-quarter earnings with securities analysts. “That’s why it’s important for our brands to be in every channel in which consumers expect to see snacks. Some of our investments in new channel penetration, such as in coffee shops, won’t necessarily drive meaningful volume, but those investments are extremely meaningful in terms of getting in front of our consumers and positioning the brand.”
Frozen innovation that will expand Conagra’s total points of distribution (T.P.D.) includes targeting new dayparts with an eye on modern wellness and new cuisine offerings, Mr. Connolly said. He added the company will be bringing more handheld items to market as well.
“…The good news is that we believe we still have a lot of room to grow at frozen,” he said. “As our distribution performance continues to improve, we expect dollar sales growth to continue to follow suit. Going forward, we’re confident in our ability to further grow T.P.D.s because of the exciting new innovation hitting the shelves during fiscal 2019.”
Net income for the quarter ended Aug. 26 was $178.2 million, equal to 45c per share on the common stock, and an increase compared with the same period of the previous year when the company earned $152.5 million, or 36c per share.
Sales for the quarter ticked up 1.7% to $1,834.4 million.
Analysts on the call focused some of their questions to the fact Conagra missed its quarterly sales guidance, which was in the range of 2% to 2.5%.
“The 0.3% of a point missed versus the bottom end of our range equates to about $5 million, which can be fully accounted for by the higher-than-planned, above-the-line marketing spend,” Mr. Connolly said. “So that puts us squarely at the bottom of the sales guidance range we gave for Q1.
“So, then the question becomes, why didn’t we land the quarter higher in the range? And the simple answer to that, it’s shipment timing, which is one of the reasons why we don’t typically like to provide sales guidance quarterly. A good example in Q1 was on our largest brand, Marie Callender’s, where we experienced a shipment slowdown near the quarter-end as customers, retailers were resetting the shelf in advance of the new Marie innovation slate.”
Mr. Connolly affirmed Conagra’s full-year guidance and said the company’s acquisition of Pinnacle Foods is expected to close in late October.
“…We are incredibly excited about the Conagra-Pinnacle combination,” he said. “Not only are there meaningful cost synergies but we are energized about what we believe we can do with the brands, particularly in frozen.”