ConAgra Foods intending to exit private label market

In a report issued on June 30, ConAgra Foods, Inc. reported results for this year’s fourth quarter, which ended May 31, 2015, with consumer and commercial foods posting operating profit growth.

Nonetheless, the same statement revealed an operating profit decline in the private brands section, after adjusting for items impacting comparability, and including the benefit of the extra week.

Sales for the private brands’ segment amounted $1 billion, down slightly. The company estimates that the extra week favorably impacted sales and volume by approximately 7%. The segment posted an operating loss of $25 million, mainly due to impairment and restructuring charges.

Sean Connolly, Chief Executive Officer of ConAgra Foods, said, “With fiscal year 2015 now behind us, we are now pursuing a different plan to maximize value for our shareholders. Our new plan will center on a more aggressive approach to driving margin improvement through SG&A reductions, supply chain efficiencies and other projects.”

Mr. Connolly then continued specifically on the matter of the company's private labels segment, stating “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. To prevent further distraction, we are pursuing the divestiture of our Private Brands operations. Because the outcome of our strategic review for the Private Brands operations will influence our long-term financial outlook, we will wait until this process is complete before sharing long-term financial commitments. We expect to offer operating details of our plans as well as long-term financial expectations at an investor event later this year.”