Conagra Brands reported results for the second quarter of fiscal year 2026, with a decrease in net sales and operating margin but a reaffirmation of fiscal 2026 guidance.
The CEO, Sean Connolly, expressed optimism for the future despite challenges in the consumer environment, pointing to momentum in the business and a return to organic net sales growth.
The total company's second quarter results included a decrease in net sales, driven by the impact of mergers and acquisitions, organic net sales, and foreign exchange.
Reported Net Sales Decrease
Net sales decreased by 6.8%, with organic net sales down by 3.0% compared to the prior year period.
Operating Margin
Reported operating margin was (20.1%) while adjusted operating margin was 11.3%.
Earnings Per Share
Reported diluted loss per share was $1.39, while adjusted earnings per share were $0.45.
Guidance for Fiscal 2026
The company reaffirmed its guidance for fiscal 2026, including expectations for organic net sales change, adjusted operating margin, and adjusted EPS.
- The decrease in organic net sales was driven by flat price/mix and a volume decrease, impacted by changes in retailer purchasing activity.
- Gross profit and gross margin decreased in the quarter, influenced by lower net sales, cost of goods sold inflation, and other factors.
- Non-cash goodwill and brand impairment charges significantly impacted the financial results, leading to a net loss for the quarter.
- The Grocery & Snacks segment saw a decrease in net sales, driven by M&A impact and a decline in organic net sales.
Despite the challenges faced in the second quarter, Conagra Brands remains optimistic about the future, focusing on innovation, investment, and a resilient supply chain. The reaffirmed guidance reflects the company's confidence in its path forward.