* Estimates 4th-qtr profit $0.55/share vs forecast of over
* Says fourth-qtr sales in consumer foods business down 7
* Says profits in private brands to be lower than expected
for several years
* Shares fall as much as 7.4 pct
(Adds details, analyst and spokeswoman comments; updates
By Sruthi Ramakrishnan
June 18 ConAgra Foods Inc warned that
its adjusted fourth-quarter profit would be lower than its
forecast, as the company struggles with its big push into
private-label foods and sales fall in its consumer foods
The company's shares fell as much as 7.4 percent to $30.41
on the New York Stock Exchange on Wednesday.
The maker of Hunt's tomato ketchup and Slim Jim beef jerky
estimated an adjusted profit of about 55 cents per share for the
quarter ended May 25, lower than its forecast of "in excess of"
"This revision is even more dire than we expected,"
Morningstar analyst Erin Lash wrote in a note.
ConAgra boosted its private brands business with the $5
billion acquisition of Ralcorp Holdings in January last year as
recession-hit shoppers bought cheaper store-branded products.
ConAgra, however, cut its full-year profit forecast twice,
blaming weak sales in its private-label business and a
steeper-than-expected fall in sales of its own brands.
The private brands business, which makes cereals, pasta,
snacks and sauces that retailers sell as their own, accounted
for 24 percent of ConAgra's total sales in the third quarter.
Profit from the business is likely to drop by about $60
million in the fourth quarter due to discounts and costs related
to the Ralcorp acquisition, ConAgra said.
The company said in February that its private-label business
was taking longer than anticipated to reach expected operating
profit levels, forcing it to cut prices to stem a fall in sales
Chief Executive Gary Rodkin said in May that discounting was
likely to pressure margins in the next several quarters.
The lower profit estimate was not because of "new or deeper
challenges; it's simply a reflection that it will take time to
grow margins," ConAgra spokeswoman Teresa Paulsen said in an
email on Wednesday.
Sales volume in consumer foods, the company's largest
business, dropped 7 percent in the fourth quarter. The business
sells meals, snacks and desserts such as Act II popcorn and Blue
A change in consumer attitudes towards heavily processed
foods is likely to hit sales at ConAgra and General Mills Inc
, Kellogg Co and Campbell Soup Co,
Bernstein Research analyst Alexia Howard wrote in a note.
ConAgra said it expected to take $681 million in non-cash
impairment charges in the fourth quarter, mostly in the private
The company said profits in its private brands business were
likely to be lower in the next several years than it had
expected. Profit is expected to grow in the mid-single digits
for the year ending May 2015.
ConAgra is scheduled to report its results on June 26.
The company's shares were down 7.3 percent at $30.45 in noon
(Additional reporting by Amrutha Gayathri in Bangalore; Editing
by Sriraj Kalluvila and Kirti Pandey)