ConAgra Explores Exit of Private Brands

30 Jun 2015 | Author: | No comments yet »

CEO: ConAgra to sell private-label business.

ConAgra Foods will look to sell its private brands business to devote resources to its consumer and commercial foods businesses, its chief executive, Sean Connolly, said Tuesday.

Safeway – to create value that benefits all shareholders. “So we have a structure built for activism, a successful activist present, and a CEO in Sean Connolly who historically has been willing to eventually do what is right for shareholders”. Within those remaining businesses, the Omaha food manufacturer’s new leader said, the company will “refine” its portfolio with “prudent” acquisitions and divestitures. “It has become clear that the time and energy the company is devoting to the private brands turnaround represent a suboptimal use of our resources,” Connolly said in a statement.

According to company SEC filings, the management has disclosed insider transactions., The Securities and Exchange Commission has divulged that Ross Andrew George, Officer (EVP and CSO) of Conagra Foods Inc /De/, had unloaded 64,770 shares at an average price of $37.75 in a transaction dated on April 9, 2015. The company also reported Tuesday a fourth-quarter profit of $209 million, or 49 cents per share, compared to a $324 million loss, or 77 cents per share, a year ago. Jana Partners LLC, which has built a more-than 7% stake in ConAgra, called on it this month to change its board, pointing to huge problems the company has had integrating the private-label foods company Ralcorp that it bought nearly three years ago for $5 billion.

Connolly, who took over as CEO on April 6, likely will be asked on Tuesday’s fiscal year-end earnings call about his views for the future of the private-label unit as well as the main part of the company, whose brands also include Chef Boyardee canned pasta, Healthy Choice frozen meals and Peter Pan peanut butter. The highest estimate of the 6 covering analysts sees the stock climbing to $52 within the next year while the lowest estimate places the 12-month target price at $30. TSN -1.49 % While that deal wasn’t one he initiated, it delivered huge value to Hillshire shareholders, with a roughly 70% premium to the share price before Tyson and Pilgrim’s Pride Corp.

PPC -2.22 % began bidding for the company. “While private label may continue to underperform in the near term, new CEO Sean Connolly’s strategic prowess could be exactly what’s needed to maximize value,” said Jonathan Feeney, analyst at Athlos Research, a Pennsylvania-based investment adviser. Two investment analysts have rated the stock with a sell rating, seven have assigned a hold rating and one has given a buy rating to the company’s stock. Some analysts say ConAgra needs to strike a deal to get rid of Ralcorp to recover from the mess, perhaps selling the division to private-brand rival TreeHouse Foods Inc. Consumers can find recognized brands such as Banquet, Chef Boyarde, Egg Beaters, Healthy Choice, Hebrew National, Hunts, Marie Callenders, Odoms Tennessee Pride, Orville Redenbachers, PAM, Peter Pan, Reddi-wip, Slim Jim, Snack Pack, and many other ConAgra Foods brands and products, along with food sold by ConAgra Foods under private brands, in grocery, convenience, mass merchandise, club stores, and drugstores.

Two years later, in its first full fiscal year with Ralcorp on its books, that had fallen to $315.1 million, even though total revenue rose by a third to $17.7 billion. ConAgra’s former CEO, Gary Rodkin, and former head of private label, Paul Maass, said in March that the turnaround in that business was taking longer than expected, but remained committed to the business and said it would achieve growth in fiscal 2016. Maass at the time touted improvements in speed and agility, and a plan to tailor different strategies and sales people to each category within the private label business, such as pasta or crackers, rather than operating the same throughout the division. “We have deep product knowledge, category by category, customer by customer.

The company can’t afford to continue struggling with the business, analysts said. “In fact, many investors could be disappointed if the business is not sold,” said Bernstein analyst Alexia Howard. Jana Partners is seeking three board seats at ConAgra, claiming in a regulatory filing that since the Ralcorp acquisition, ConAgra’s “board has failed to adequately address the destruction of shareholder value caused by the acquisition.” Other areas of interest to analysts on Tuesday will be which branded foods will be a priority for Mr.

From Wolf canned chili to Snack Pack pudding, that division is also facing significant hurdles as Americans seek fresher options and foods that seem to have more natural ingredients. ConAgra’s frozen dinners, like its Banquet and Healthy Choice brands, have lost their appeal as refrigerated, ready-to-heat, meals at grocery store delis become more popular.

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