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Conagra Invests 15M Dollars to Meet Increased Product Demand

Conagra Invests 15M Dollars to Meet Increased Product Demand

Monday, April 26th, 2021

Marked by ebbs and flows in the retail market, 2020 and 2021 have been a time of adjustment for companies across the supply chain. Conagra was one of those who made key shifts during this span, as the company announced in its recent Quarter Three 2021 earnings call. This includes a $15 million investment in transportation to keep products stocked as demand skyrocketed.

David Marberger, Chief Financial Officer, Conagra“Demand was higher than we expected during the quarter. To adequately service this demand, we made the decision to invest approximately $15 million in the quarter. This meant aggressively seeking out every available truck and adjusting how we ship to customers,” said David Marberger, Chief Financial Officer, during the call as reported by Seeking Alpha. “To best service demand for certain brands, we had to bypass our normal distribution network and ship directly to customers. While we incurred additional costs to implement these actions, which impacted our operating margin, this enabled us to minimize out of stocks, maximize on-shelf availability, and maximize profit dollars.”

Although this $15 million investment did lower the company’s profit margin, reported sales increased by 8.5 percent while organic sales rose by 9.7 percent compared to the year prior.

Conagra was one of many companies which made key shifts in its supply chain network, including a $15 million investment in transportation to keep products stocked as demand skyrocketed

In addition to this rise in sales, other highlights from Conagra’s third quarter results include:

  • Adjusted EBITDA increased 9.9 percent to $566 within the quarter
  • Net sales of $2.47 billion
  • Retail sales increase of 13.8 percent across the company

Much of this growth was created through Conagra’s snacking products and a significant increase in demand across these categories.

Sean Connolly, President and Chief Executive Officer, Conagra Brands“We generated double-digit retail sales growth on a year-over-year and two-year basis in snacking, led by impressive increases across popcorn, sweet treats, and meat snacks,” said Sean Connolly, President and CEO. “And as consumers continued snacking at elevated rates, we capitalized with strong Q3 velocity growth across our leading brands. Our staples portfolio also delivered solid results in Q3, including 15 percent retail sales growth led by double-digit quarterly growth across key staple categories.”

To read the earnings call in its entirety, click here.

As the pandemic continues to influence the future of the retail sector, what new strategies will companies implement to meet changing demand? For the latest updates, keep checking with Deli Market News.

Conagra Brands