s, Inc. is leveraging insights and capabilities within its portfolio to develop on-trend products with hopes of improving its consumer foods business.Capitalizing on demand for its Marie Callender’s and Banquet pot pie platform, the company is launching a similar product under its Bertolli banner of frozen meals. Italian-style tortas, which are meat-filled pies stuffed with ricotta, Parmesan and mozzarella cheese in a flaky pastry crust, are set to debut. Also in the pipeline are new pot pie products from Marie Callender’s and Banquet, including a Salisbury steak deep-dish variety.
“This demonstrates our ability to grow an already strong platform by leveraging our insights and capabilities,” said Gary Rodkin, chief executive officer, during a March 20 earnings call with analysts.
Another new product from the Pam cooking spray brand features coconut oil, an on-trend ingredient ConAgra expects will resonate with consumers.
Meanwhile, rescue efforts are under way for what the company has identified as its three underperforming brands of Healthy Choice, Orville Redenbacher’s and Chef Boyardee, which drove volume decline and top-line softness in the segment during ConAgra’s third quarter. A course correction retail strategy concentrates on four P’s: price, packaging, placement and promotion.
“We have specific action plans under way to stabilize and improve performance through product and packaging changes, focused messaging and more impactful in-store initiatives,” Mr. Rodkin said. “Some of these changes will happen quickly, and others will take place across the next several quarters. Net-net, we expect to see better performance in aggregate across these three brands in fiscal 2015.”
Progress in the private brands integration and international growth in potato operations helped ConAgra offset operating challenges in consumer and commercial foods.
Net income nearly doubled for the quarter ended Feb. 23 to $236.9 million, equal to 59c per share on the common stock, which compared with $123.4 million, or 29c per share, in the year-ago period.
Items affecting comparability included hedge costs and acquisition-related restructuring and integration.
Net sales for the quarter increased 15% to $4,389.7 million from $3,833.8 million last year.
Operating profit for the Consumer Foods segment rose 0.6% to $266.3 million during the quarter, as manageable inflation, supply chain productivity efforts, lower incentive compensation and other efficiencies helped offset top-line challenges. Segment sales declined 3.5% to $1,870.4 million. The company attributed volume decline in the quarter to a shift in holiday timing, as well as continued challenges and volume declines for Healthy Choice, Orville Redenbacher’s and Chef Boyardee. Brands posting growth during the quarter included Bertolli, Hebrew National, Reddi-wip, Ro*Tel, Slim Jim, Swiss Miss and Wolf.
For the Commercial Foods segment, operating profit was $163.5 million, down 12% from the prior-year period. Sales for the segment decreased 0.7% to $1,456 million, benefitting from Ralcorp food service results that helped offset the loss of a major Lamb Weston food service customer. In addition to the customer mix shift, weaker-than-planned potato crop quality contributed to lower profits for the potato business.
Operating profit for the Private Brands segment advanced to $44.7 million from $7 million in last year’s third quarter, and sales advanced 149% to $1,063.3 million from last year’s $427.9 million, reflecting the acquisition of the Ralcorp businesses. The company said the segment is below plan this fiscal year due in part to transition issues and competitive pricing actions that have negatively affected margins.
ConAgra has reaffirmed its full-year earnings guidance. Additionally, the Ardent Mills transaction remains on track to close in the second quarter of the calendar year.
