ConAgra quarterly revenue misses, shares fall

CHICAGO (Reuters) - ConAgra Foods Inc (CAG.N) posted an unexpected dip in quarterly revenue on Thursday as it offered coupons and other promotions to push new products, sending shares down 4 percent.

ConAgra's key consumer foods segment showed 3 percent volume growth, helped by sales of products that consumers embraced during the recession, such as Banquet frozen dinners and Chef Boyardee pasta.

But dollar sales in the segment rose only 2 percent, raising concern that the higher volume stemmed from heavy price promotions.

"The fact that they are having to be promotional to drive those volumes in the short term is a wise move, but what happens if commodity costs go up?" Morningstar analyst Erin Swanson said.

Higher commodity costs could cut into the money manufacturers use for promotions, and ConAgra could then suffer if it cannot offer consumers the same deals, she said.

ConAgra said profit rose to $228.7 million, or 51 cents a share, in the third quarter ended on February 28, from $193.12 million, or 43 cents a share, a year earlier.

Excluding one-time items, earnings were 44 cents a share, matching the analysts' average estimate, according to Thomson Reuters I/B/E/S.

Sales fell 1 percent to $3.10 billion, as the company's flour milling operation passed on lower prices to customers. Analysts on average forecast $3.15 billion.

For the year, ConAgra still expects earnings of $1.73 a share, excluding one-time items.

On a conference call with analysts, ConAgra said most of the promotional spending was for items like new Healthy Choice and Marie Callendar's meals. Manufacturers typically offer coupons and other deals to lure consumers to try new products and to get retailers to put those products on store shelves.

Prior to Thursday, ConAgra shares were up almost 14 percent since the beginning of February as the company showed it was able to lift sales in the once-moribund consumer food business.

ConAgra shares were down $1.08 or 4.1 percent at $25.02 on Thursday afternoon on the New York Stock Exchange.

(Reporting by Brad Dorfman; Editing by Derek Caney, Lisa Von Ahn and Matthew Lewis)