ConAgra Explores Exit of Private Brands

ConAgra Foods Inc. said Tuesday it is exploring a divestiture of its struggling private-label business and will move to aggressively cut costs and shift its focus to its consumer and commercial brands.

Chief Executive Sean Connolly, who took the helm of the packaged-food giant on April 6, said in a news release that ConAgra will take a more aggressive approach to improving margins and will explore "prudent divestitures and acquisitions."

"As I have intensely studied the situation in our private-brands operations over the last few months, 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." he said.

Shares of the company gained 2.8% in premarket trading.

ConAgra has come under fire from investor Jana Partners LLC, which has built a more-than 7% stake in the maker of Slim Jim snacks and Wesson cooking oil. Earlier this month, Jana called on ConAgra to change its board, pointing to huge problems the company has had integrating the private-label foods company Ralcorp it bought nearly three years ago for $5 billion. ConAgra has taken more than $2 billion in write-downs on the private label business.

In the latest quarter, the division, which sells snacks, cereal, pasta and condiments, saw sales edge down about 1%. Profit was dented by higher commodity costs and the lower volumes, the company said.

Sales in its commercial foods segment increased 6.6%, while sales in its consumer foods unit grew 4.5%.

Overall, the company posted a profit of $209.2 million, or 48 cents a share, compared with a year-earlier loss of $324.2 million, or 77 cents a share.

Excluding certain items, per-share earnings from continuing operations were 59 cents.

Net sales grew 3.7% to $4.1 billion.

Analysts surveyed by Thomson Reuters recently projected 59 cents a share in earnings and $4.14 billion in revenue.

Write to Chelsey Dulaney at [e-mail]

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