Conagra Brands Stock Falls 5% in 2025 Amid Chicken and Frozen Veggie Supply Challenges

Essential Insights

• Conagra Brands, the producer of Healthy Choice frozen meals, has downgraded its fiscal 2024 sales and earnings projections, citing difficulties in sourcing chicken and frozen vegetables.
• The company temporarily halted operations at its main chicken processing plant to resolve quality control issues.
• Birds Eye frozen vegetable production faced obstacles meeting the surge in consumer demand.

On Tuesday, investors reacted negatively to Conagra Brands (CAG) as the company reduced its full-year sales forecast, causing shares to drop over 5%.

Known for brands like Healthy Choice and Birds Eye, Conagra announced on Monday that challenges in securing sufficient chicken and frozen produce supplies forced a revision of its outlook.

Conagra now anticipates a 2% decline in sales for fiscal year 2024, a sharper drop than the previously expected flat or up to 1.5% decrease compared to 2023. The fiscal year concludes in late May.

“Due to these supply challenges, we couldn't fulfill all demand in Q3, which will adversely affect our sales and profits for fiscal 2024,” CFO Dave Marberger stated during an investor conference, as per AlphaSense transcripts. “We expect these impacts to be temporary.”

Conagra’s primary chicken facility experienced quality inconsistencies, necessitating a shutdown, adjustments, and a phased restart. The company incurred higher costs by purchasing chicken from third-party suppliers.

Frozen Vegetable Demand Nearly Doubles for Conagra

The plant’s production will continue at a reduced pace while undergoing a planned upgrade.

Conagra also struggled to keep frozen vegetables stocked amid demand nearly doubling from December to early January compared to last year. The company has increased surge capacity to address this growth.

Besides Healthy Choice and Birds Eye, Conagra owns brands like Slim Jim, Duncan Hines, and Marie Callender's. It now projects earnings per share (EPS) of $2.35 for the year, down from the earlier forecast of $2.45 to $2.50.

The earnings revision disappointed investors, with Conagra shares falling over 5% on Tuesday and declining more than 20% over the past six months.

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