Conagra Brands Reports Q1 2026, EPS Tops Forecasts Despite Sales Drop

Conagra Brands, Inc. (NYSE: CAG) has released its financial results for the first quarter of fiscal year 2026, ending August 24, 2025. This report provides an analysis of the company’s performance against expectations and offers insights into future guidance.

Mixed First-Quarter Performance with Lower Revenue Across Key Segments

Conagra Brands reported a 5.8% decrease in net sales for the first quarter of fiscal 2026, amounting to $2.6 billion. Organic net sales saw a slight decline of 0.6%, influenced by a 1.2% drop in volume, partially offset by a 0.6% increase in price/mix. The company’s adjusted gross profit fell by 11.3% to $644 million, reflecting challenges such as inflation in the cost of goods sold and the impact of divested businesses. Gross margin decreased to 24.3% from 26.5% in the previous year.

Despite these setbacks, Conagra Brands reported an adjusted earnings per share (EPS) of $0.39, surpassing the anticipated EPS of $0.33. However, this represents a 26.4% decrease from the previous year. The reported EPS was $0.34, a significant drop from the prior year’s $0.97. The decline in EPS is attributed to reduced adjusted gross profit and the loss on the sale of businesses.

In terms of segment performance, the Grocery & Snacks segment experienced an 8.7% decline in net sales, while the Refrigerated & Frozen segment saw a smaller decrease of 0.9%. The International segment faced an 18.0% drop in sales, and the Foodservice segment decreased by 0.8%. Operating profits varied, with the Grocery & Snacks segment increasing by 5.0%, whereas the Refrigerated & Frozen segment’s operating profit declined by 35.8%.

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Conagra Reaffirms Full-Year 2026 Guidance Despite Market Pressures

Conagra Brands has reaffirmed its guidance for fiscal 2026, projecting organic net sales growth between -1% and 1% compared to fiscal 2025. The company anticipates an adjusted operating margin of approximately 11.0% to 11.5% and adjusted EPS ranging from $1.70 to $1.85. This guidance reflects the company’s strategic focus on disciplined execution and capital allocation amid a challenging economic environment.

The company expects continued inflation in the cost of goods sold, with core inflation slightly exceeding 4%. Additionally, U.S. tariffs are expected to impact fiscal 2026, with anticipated increases in the cost of goods sold by approximately 3% annually. Conagra Brands plans to mitigate these effects through cost-saving initiatives, alternative sourcing, and targeted pricing actions.

Interest expense for the fiscal year is projected to be around $390 million, with an adjusted effective tax rate of approximately 24%. Conagra Brands remains committed to its strategic objectives and is poised to navigate the complexities of the current market while striving for operational efficiency and growth.

Disclaimer: The author does not hold or have a position in any securities discussed in the article. All stock prices were quoted at the time of writing.