ConAgra Foods Inc. said Tuesday it is exploring a divestiture of
its struggling private-label business and will move to aggressively
cut costs and shift its focus to its consumer and commercial
brands.
Chief Executive Sean Connolly, who took the helm of the
packaged-food giant on April 6, said in a news release that ConAgra
will take a more aggressive approach to improving margins and will
explore "prudent divestitures and acquisitions."
"As I have intensely studied the situation in our private-brands
operations over the last few months, it has become clear that the
time and energy the company is devoting to the private brands
turnaround represent a suboptimal use of our resources." he
said.
Shares of the company gained 2.8% in premarket trading.
ConAgra has come under fire from investor Jana Partners LLC,
which has built a more-than 7% stake in the maker of Slim Jim
snacks and Wesson cooking oil. Earlier this month, Jana called on
ConAgra to change its board, pointing to huge problems the company
has had integrating the private-label foods company Ralcorp it
bought nearly three years ago for $5 billion. ConAgra has taken
more than $2 billion in write-downs on the private label
business.
In the latest quarter, the division, which sells snacks, cereal,
pasta and condiments, saw sales edge down about 1%. Profit was
dented by higher commodity costs and the lower volumes, the company
said.
Sales in its commercial foods segment increased 6.6%, while
sales in its consumer foods unit grew 4.5%.
Overall, the company posted a profit of $209.2 million, or 48
cents a share, compared with a year-earlier loss of $324.2 million,
or 77 cents a share.
Excluding certain items, per-share earnings from continuing
operations were 59 cents.
Net sales grew 3.7% to $4.1 billion.
Analysts surveyed by Thomson Reuters recently projected 59 cents
a share in earnings and $4.14 billion in revenue.
Write to Chelsey Dulaney at Chelsey.Dulaney@wsj.com
Access Investor Kit for ConAgra Foods, Inc.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US2058871029
Subscribe to WSJ: http://online.wsj.com?mod=djnwires