Sales compared with estimate
Conagra Brands’ (CAG) sales returned to growth during fiscal 2Q18, which should boost investors’ confidence. The growth was particularly impressive considering the pressure on its top line due to brand divestitures and weak demand in the United States (SPY) for packaged foods.
Conagra reported sales of $2.2 billion, surpassing analysts’ estimate and marking growth of 4.1% YoY (year-over-year). The rise was primarily due to benefits from recently acquired brands and demand driven by this year’s hurricanes. The company’s organic sales improved 2.3% YoY in fiscal 2Q18.
What drove sales?
Conagra’s sales were driven by the healthy performance of recently acquired brands BIGS, Duke’s, Frontera, and Angie’s BOOMCHICKAPOP, which added about 140 basis points to the company’s top line. Favorable currency trends added another 40 basis points, and higher demand driven by this year’s hurricanes added 220 basis points.
General Mills’ (GIS) top line also returned to growth, driven by increased sales in its cereal and snack division. Meanwhile, Kellogg (K), Hershey (HSY), and Kraft Heinz (KHC) also marked sales improvement, reflecting innovative products, acquisitions, and favorable currency rates. Campbell Soup’s (CPB) sales fell YoY.
Conagra now projects its organic sales to be at the higher end of its earlier guidance. Previously, Conagra forecast that its organic sales would be flat or fall 2% in fiscal 2018. Meanwhile, net sales are anticipated be 1.0%–1.5% higher than organic sales. Conagra Brands’ top line is anticipated to benefit from innovative products, recently acquired brands, and favorable currency rates. However, increased brand investments, divestitures of underperforming brands, and slotting expenses are expected to impact its performance.