Shares of packaged foods giant Conagra Brands (CAG) - Get Report plunged on Tuesday after the company updated its full-year guidance on Monday following weak orders from restaurants and generally soft retail sales in January.
Conagra stock fell nearly 8% in morning trading after the maker of staple food brands such as Hunt's, Chef Boyardee, and Orville Redenbacher's saw weak orders from restaurants in the holiday season, followed by soft retail results in January.
The unexpected drop in demand prompted the Chicago-based company to cut its full-year adjusted per-share earnings forecast by 4% to $2.04 a share, below the $2.11 a share analysts polled by FactSet had been expecting.
Sales for fiscal 2020 are now seen rising by approximately 10% to $10.52 billion vs. previous guidance of 12.7% growth and sales of $10.75 billion. Organic net sales should rise by roughly 0.3%, down from 1.3%, the company said.
Management had expected tough year-over-year comparisons in its fiscal third quarter, which ends on Feb. 23, but the difficulties in certain categories ran deeper than anticipated, CEO Sean Connolly said in a statement issued on Presidents Day when stock markets in the U.S. were closed.
“While we planned for tougher year-over-year comparable results in the third quarter, we did not plan for this level of category softness,” Connolly said in a statement
However, Connolly said that management believes “… the recent consumption weakness is abating, which will allow the company to meet its longer-term profit projections.
“We remain confident in our brands, the proven Conagra Way playbook, and the long runway of growth ahead,” Connolly said.
Shares of Conagra were down 7.77%, or $2.54 a share, at $30.15 in morning trading on Tuesday.