By Anuja Bharat Mistry and Jessica DiNapoli
(Reuters) - Conagra Brands (NYSE:CAG) forecast annual revenue and profit below analysts' estimates on Thursday, as cash-strapped consumers turned to cheaper pantry staples for their at-home meals.
Shares of the Slim Jim beef jerky maker, which also missed fourth-quarter revenue expectations, were down 2.5% in midday trade.
Despite more consumers preferring to eat at home rather than dining out, the packaged food industry has struggled with volumes as higher living costs have driven people to seek cheaper alternatives.
The 1.8% volume decline seen in the fourth quarter was in line with the prior quarter, as Conagra reduced prices of some of its frozen products to lure back consumers.
However, volumes in the snacks category remained weak, falling 3.6% in the quarter, as consumers shifted towards private label brands sold at Walmart (NYSE:WMT) and Kroger (NYSE:KR).
The Chicago, Illinois-based company expects overall volumes to turn positive in the last six months of fiscal 2025, CEO Sean Connolly said in a call with Reuters.
Price cuts in its frozen food business helped demand to recover, with quarterly volumes 0.9% rising after several quarters of declines.
Snacks giant PepsiCo (NASDAQ:PEP) also missed expectations for quarterly revenue on Thursday.
Brands in the Conagra portfolio "face a tough road ahead," eMarketer analyst Blake Droesch said. "If a consumer adopts more budget-friendly shopping habits, they are unlikely to immediately return to their old ways once inflation stabilizes."
Conagra expects fiscal-year 2025 organic sales to be flat to down 1.5%, compared with analysts' estimates of 1.54% rise, as per LSEG data.
Adjusted profit for the year will range from $2.60 to $2.65 per share, compared to analysts' estimates of $2.69 per share.
Conagra reported net sales of $2.91 billion for the quarter ending May 26, below analysts' average estimates of $2.93 billion.