By Juveria Tabassum
(Reuters) -Conagra Brands cut its annual organic net sales growth and profit forecasts on Thursday, warning of a slower recovery in demand for its packaged meals and snacks.
The Slim Jim beef jerky maker recorded its 10th straight quarter of volume declines, forcing the company to ramp up its marketing and advertising spend in some categories.
"We are not banking on major improvement in the macro consumer environment or signing up for a huge consumer response," CEO Sean Connolly said.
Executives said the firm, which once benefited from price increases, is now also looking to cut back on prices in some categories to spur demand.
The company forecast its annual adjusted earnings per share to be in the $2.60 to $2.65 range, compared with its previous projection of $2.70 to $2.75.
Conagra expects annual organic net sales to decrease between 1% and 2%, compared with its earlier forecast of about 1% growth.
"The company's forecast cuts are a clear acknowledgement that it will take time to right its ship," said Zak Stambor, senior analyst at Insider Intelligence.
Volumes in its grocery and snacks segment, which includes canned meat and Act II popcorn, fell 3.7% in the quarter. In its refrigerated and frozen segment, volumes fell 3.3%.
Conagra's margins fell 261 basis points, to 14% in the reported quarter.
Shares of company, which fell 26% in 2023, were down about 3% after its second-quarter net sales fell 3.2%, to $3.21 billion, missing market expectations.
"We expect sentiment in food to remain poor," RBC Capital Markets analyst Nik Modi said.