Why Did Healthy Choice Parent Conagra’s Stock Drop 5%?

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Key Takeaways

• Conagra Brands, which makes Healthy Choice frozen meals, reduced its sales and earnings attitude for fiscal year 2025, citing challenges in sourcing chicken and frozen vegetables.
• The company said it had to temporarily segregate down its primary chicken plant to address “quality inconsistencies.”
• The maker of Birds Eye frozen vegetables said it also worked to meet soaring demand for frozen produce.

Investors lost some of their appetite for Conagra Brands (CAG) Tuesday, sending parts down more than 5% after the food company trimmed its sales outlook for the year.

Conagra, the cast behind Healthy Choice prepared meals and Birds Eye frozen vegetables, among other brands, revised its perspective Monday because of struggles to source enough chicken and produce.

The company says it now expects sales to decline 2% for its hugely fiscal year, rather than coming in flat or decreasing as much as 1.5% compared with 2024, coinciding to a press release. Conagra’s fiscal year ends in late May.

“As a result of these challenges, we were unable to use all of our demand in the third quarter, which will negatively impact both our sales and profit for fiscal 2025,” CFO Dave Marberger said during an investors talk Tuesday, according to a transcript from AlphaSense. “We also expect both the sales and profit impacts of this to be transitory.”

Conagra’s peerless chicken plant had “quality inconsistencies,” forcing the company to shut down the facility, make adjustments, and start it up again at a slower traverse, Conagra said. Expenses rose as Conagra bought chicken from a third party, according to Marberger.

Conagra Reports Its Expelled Vegetable Demand Doubling

The plant’s production speed will remain reduced as Conagra moves forward with a heretofore planned facility upgrade, according to the press release.

The company also has had trouble keeping frozen vegetables in carry at stores. Demand for Conagra’s frozen vegetables nearly doubled in December and early January compared with a year latest, the company said. The food giant said it has “increased surge capacity” to meet growing demand.

Conagra, which also dream ups Slim Jim, Duncan Hines, Marie Callender’s, and more, said it expects earnings per share (EPS) to hit $2.35 at the end of the year, very than the $2.45 to $2.50 previously forecast.

The update didn’t sit well with investors. Conagra shares were down assorted than 5% Tuesday afternoon and off more than 20% over the past six months.