CHICAGO — Conagra Brands Inc. is executing on its plan to shore up its financial performance and has begun a portfolio review, president and chief executive officer John Brase said in reporting improved bottom- and top-line results for the fiscal 2027 first quarter.

“After spending the quarter working closely with our teams and engaging across the organization, I’m even more confident that we’re focused on the right opportunities and taking the right actions,” said Brase, who became Conagra’s CEO on June 1. “We delivered a solid start to the fiscal year, despite a challenging operating environment. But, overall, we feel good about our execution thus far.

“We’re making tangible progress against the priorities we laid out last quarter. It’s still early, but we’re moving from words to action. And we’re already seeing encouraging proof points.”

For the first quarter ended Aug. 24, net income rose 6% to $174.3 million, equal to 36¢ per share on the common stock, from $164.5 million, or 34¢ per share, a year earlier. Adjusted net earnings edged up 4.3% to $197.3 million, or 41¢ per share, from $189.2 million, or 39¢ per share, a year ago. Conagra attributed the uptick mainly to lower adjusted SG&A expenses and higher equity earnings. The adjusted earnings-per-share result beat analysts’ high-end average estimate of 32¢.

Net sales dipped 1.4% to $2.6 billion from $2.63 billion, compared with a 6% year-over-year decline a year ago. Conagra said the decrease in the fiscal 2027 quarter reflected a 0.5% negative impact from divested businesses, a 0.2% increase from foreign exchange and a 1.1% downtick in organic net sales. Organic sales included a 2.1% decrease in volume and a 1% gain in price/mix. 

Priorities set

“Our portfolio has meaningful strengths, but we also have clear opportunities to improve our execution and strengthen our performance,” Brase said.

He then pointed to the four-point action plan he outlined in July when reporting fiscal 2026 results, which included a $1.92 billion full-year net loss driven by impairment charges.

“We remain focused on our priorities to restore margins, increase investments in our brands and supply chain, reduce complexity and rebalance capital allocation,” Brase said. “These priorities are already shaping how we operate and where we focus our resources. And we’ve made tangible progress against each of them. On margins, we expect to start seeing results from our strategic, inflation-justified pricing near the middle of the second quarter. Our productivity pipeline also remains on track to deliver more than 4% for the full year.”

On the investment front, Conagra has stepped up its advertising and promotional spending and “sharpened where those dollars are being spent,” Brase said.

“That investment is already driving meaningful improvements in reach and engagement, and doing so much more efficiently,” he said. “We’re also advancing several capital and network optimization initiatives across our supply chain, which will help improve our longer-term cost structure.”

In the area of simplification, Conagra has “taken several concrete actions,” including moves to streamline its leadership structure that “establish clearer ownership” as well as reduce layers and speed decision-making, Brase said.

“We’ve also launched a comprehensive review of our SKU portfolio,” he said. “We’re making bold decisions now to focus our resources on our strongest opportunities and reduce complexity across manufacturing and procurement. One early example is our decision to exit the Celeste frozen pizza business. While that action created a modest 15-basis point headwind to the first-quarter net sales, it allows us to redirect our resources toward brands and categories where we have greater scale and stronger growth potential. Importantly, we expect the decision to be accretive to margins going forward.

“We are taking an aggressive approach to reduce SKU complexity across our business. This work will require thoughtful execution and close coordination with our customers, including alignment with customer reset cycles and our internal supply chain operations. As a result, the benefits will build over time, with a majority expected to be realized over the next 12 to 18 months.”

Conagra CEO John Brase called the move to exit the Celeste frozen pizza business “one early example” of the company’s efforts to “focus our resources on our strongest opportunities.” 

Conagra, too, is mulling strategic options “for certain non-core businesses,” Brase said, noting that he was “not going to get ahead of that process or speculate about individual brands.”

“We are taking an aggressive look at where we have the strongest right to win, where our resources can generate the best returns and whether we are the best owners of every business in our portfolio,” he said.

On the capital allocation side, Brase said Conagra reset its dividend in July, “increasing the cash available for debt reduction and reinforcing our path toward our target leverage ratio of 3.0x.” The change lowered the company’s yearly dividend to 70¢ per share, or 17.5¢ quarterly, from $1.40 annually, or 35¢ quarterly.

“These are tangible actions, not simply plans, and they demonstrate the urgency with which we are moving,” Brase said.

Sales decline for core businesses

Conagra saw retail dollar and unit sales slip 0.6% and 3.3%, respectively, in the first quarter, compared with flat results in dollars and a 2% volume decline in the fourth quarter and decreases of 1.2% in dollars and 1.7% in units in the first quarter of fiscal 2026. The company said that, in the 2027 first quarter, it gained dollar share in categories such as frozen vegetables, pudding, chili, frozen breakfast, hot dogs and frozen desserts.

Among Conagra’s business units, Refrigerated & Frozen net sales were down 2.1% to $1.054 billion, as organic sales fell 1.6% on declines of 0.1% in volume and 1.5% in price/mix. Grocery & Snacks net sales were down 2.6% year over year to $1.051 billion, with organic sales decreasing 2% on a 5.4% volume decrease and a 3.4% rise in price/mix.

Foodservice net sales grew 3.2% to $272.9 million as a 3.3% organic sales gain was fueled by increases of 2.5% in volume and 0.8% in price/mix. International segment net sales rose 2.7% to $218.1 million and were up 0.9% organically on a 1.6% increase in price/mix and a 0.7% decrease in volume.

“We knew coming into fiscal ’27 that the environment would remain challenging,” Brase said. “Consumers continue to be thoughtful about where they spend their dollars, and we’re managing through a volatile input-cost environment.”

Based on the first-quarter performance and its outlook for the rest of the year, Conagra reaffirmed its fiscal 2027 guidance. The company projects adjusted EPS of $1.40 to $1.50 and an organic net sales decline of 1% to 3%. 

Russ Redman is senior editor at Milling & Baking News. Joining Sosland Publishing Company in 2024, he has deep experience covering the food and CPG sectors, primarily in the food, drug, mass and convenience retail and distribution channels. That includes stints as an editorial manager at two supermarket trade publications. He has a bachelor’s degree in journalism from Hofstra University in Long Island, NY.

Connect with Russ Redman via email.