ConAgra Plans Private Label Exit
ConAgra Foods, Inc. announces it plans to exit private label through the divestiture of its Private Brands operations.
"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," says Sean Connolly, chief executive officer of ConAgra Foods. "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.”
ConAgra's Private Brands posted an operating profit decline after adjusting for items impacting comparability, and including the benefit of the extra week. Sales for the Private Brands segment were $1 billion, down slightly. The company estimates that the extra week favorably impacted sales and volume by approximately 7 percent. The segment posted an operating loss of $(25 million), as reported, due to impairment and restructuring charges. After adjusting for $56 million of net expense from items impacting comparability in the current quarter, and $618 million of expense from items impacting comparability in year-ago period amounts (mostly impairment charges), comparable operating profit declined 30 percent, which includes the benefit of the extra week. Higher commodity costs negatively impacted profits, as did lower volumes, according to the company.
"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," says Sean Connolly, chief executive officer of ConAgra Foods. "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.”
ConAgra's Private Brands posted an operating profit decline after adjusting for items impacting comparability, and including the benefit of the extra week. Sales for the Private Brands segment were $1 billion, down slightly. The company estimates that the extra week favorably impacted sales and volume by approximately 7 percent. The segment posted an operating loss of $(25 million), as reported, due to impairment and restructuring charges. After adjusting for $56 million of net expense from items impacting comparability in the current quarter, and $618 million of expense from items impacting comparability in year-ago period amounts (mostly impairment charges), comparable operating profit declined 30 percent, which includes the benefit of the extra week. Higher commodity costs negatively impacted profits, as did lower volumes, according to the company.