What affected Conagra’s Grocery & Snacks division?
Conagra Brands’ (CAG) Grocery & Snacks segment witnessed a decline of 1.3% in fiscal 3Q18 to $0.8 billion due to lower volumes and pricing. During the quarter, the segment’s organic net sales decreased 6.3%. A higher-than-expected reduction in retailers’ inventory and lower shipments affected the segment’s volume in 3Q. Meanwhile, investments in distribution and consumer trials to drive consumption adversely impacted its pricing and mix.
However, incremental sales from Angie’s BOOMCHICKAPOP, Duke’s, and BIGS contributed 5.0% to the segment’s net sales. Management remains upbeat thanks to the improving consumption trend. Meanwhile, Conagra expects incremental sales from acquired brands and innovation-led products to drive the segment’s top line in fiscal 2019.
Refrigerated and frozen sales continue to improve
Net sales of the company’s Refrigerated & Frozen segment continued to grow and marked an increase of 3.2% to $0.7 billion in 3Q. Meanwhile, the segment’s organic net sales improved 2.6%, driven by higher volumes (+2%) led by strength in core business and innovation-led product launches including Healthy Choice, Marie Callender’s, and Banquet businesses. Moreover, pricing and mix improved 1%, driven by innovation offset in part by investments in brand building. Notably, the acquisition of Sandwich Bros contributed 60 basis points to the sales growth rate.
International segment had a strong quarter
Conagra Brands’ net sales at its International segment increased 8.9% YoY to $0.2 billion. Organic sales increased 4%, driven by 1% volume growth and 3% improvement in pricing and mix. Meanwhile, favorable currency rates added 5% to the top-line growth rate.
Foodservice segment hit by lower volumes
Net sales at the Foodservice segment decreased 6% to $0.2 billion, reflecting a significant decline in volumes, partially offset by improved pricing and mix. The company’s planned exit from non-core and low-margin businesses adversely affected the segment’s volume in 3Q.