Conagra Announces Q2 Sales, Sandwich Bros. Purchase Deal
Chicago, Illinois-headquartered Conagra Brands has reported second quarter net sales growth of 4.1% to $2.17 billion, as net income for the 2018 fiscal year period ending on November 26 almost doubled to $223.5 million compared to receipts during the same quarter in 2016. Part of the reason for the significant increase was attributed to Hurricanes Harvey and Irma, which prompted surges in pre- and post-storm purchases of products from the diversified food company.
Net sales for Conagra’s Refrigerated & Frozen segment increased 2% to $758 million in the quarter, aided by core business improvements and innovation launches by the Marie Callender's, Healthy Choice and Banquet prepared foods brands. Continued growth in Reddi-wip whipped topping sales and the addition of frozen innovation launches by Frontera also added to the growth rate. Investments to drive distribution, enhance shelf presence and stimulate consumer trial led to a price/mix decrease of 2%, however.
Operating profit for the segment advanced 9% in the quarter, and adjusted operating profit increased 7%. The increases were primarily driven by volume growth and supply chain realized productivity. These benefits were partially offset by increased input costs and investments to boost distribution, increase shelf space presence and encourage consumer trial.
"One year after becoming a pure-play, branded food company, Conagra is growing again,” said President and CEO Sean Connolly. “Our work to upgrade the quality of our revenue base and rebuild our innovation pipeline is bearing fruit, particularly in our frozen business, where we put much of our focus. Better than expected top-line performance through the second quarter is enabling us to invest more in our US retail business to enhance distribution, merchandising and consumer trial of our brands – especially where we have new renovation or innovation.”
On the Acquisition Trail
The company bolstered its snacking and frozen platforms by completing the acquisition of Angie's Artisan Treats during the quarter, and by entering into a definitive agreement to acquire the Sandwich Bros. of Wisconsin frozen sandwich company. The transaction is expected to be consummated in early 2018, subject to customary closing conditions, including the receipt of regulatory approvals.
"Adding Sandwich Bros. to our portfolio is another step in Conagra Brands' ongoing work to accelerate growth," said Connolly. "This acquisition will bring our unique capabilities and expertise within the frozen handheld category, which we look forward to leveraging for further growth and extension into additional Conagra brands."
Sandwich Bros. flatbread pocket sandwiches are filled with proteins including 100% Angus beef, chicken raised without antibiotics, all natural sausage and real Wisconsin cheese. The family-owned business has experienced rapid growth with approximately $60 million in net sales for the twelve months ending in November of 2017. Distribution of its breakfast sandwich and entrée flatbread sandwich line is nationwide to grocery, club and convenience stores and mass merchandisers, in addition to customers in the foodservice, military and private label sectors.
"We are extremely proud of what our team has accomplished in a few short years, and look forward to helping Conagra accelerate the growth of Sandwich Bros. products," said Salem Kashou, president of company.