Did Someone Order Savings – US-FOREX.US
Quarterly results from ConAgra Foods on Thursday proved that budget-minded consumers will buy brand-name products if they consider them a good value. Convenience and price dictate shoppers’ buying decisions, resulting in double-digit sales growth for the Omaha, Neb.-based company’s frozen meal lines like Healthy Choice, Marie Callender’s and Banquet. On Thursday, ConAgra Foods
said enhanced marketing efforts plus product and pricing improvements helped serve up earnings that met analysts’ expectations for a fourth-quarter profit of 41 cents a share and sales of 3.3 billion. The company also benefited from moderating inflation costs that, according to UBS analyst David Palmer, helped narrow the price gap between private-label and ConAgra products. On Tuesday, he upgraded the company to “buy” from “neutral” based on his belief that the company’s improved execution has been undervalued by the market. ConAgra shares were down by 1.04, or 5.2%, at 18.99 during Thursday’s afternoon trading session. After grocery store operator Kroger
announced a meaty 12.7% boost to first-quarter profits aided by its strong private-label business, which contributed 35% of the quarter’s sales, investors questioned whether popular food lines are getting squeezed by frugal shoppers. ConAgra does some private-label business but is largely driven by its popular brand portfolio that includes Chef Boyardee, Swiss Miss and Hunt’s.The food business has become increasingly competitive as companies fight to convince consumers that they provide the best values on everything from edibles to household basics.
Shares of Supervalu
sunk on Wednesday as the grocer said promotional efforts and aggressive cost-cutting would result in lower-than-expected first-quarter earnings. Its stock was down by 44 cents, or 3.2%, at 13.37, on Thursday afternoon. Citi analyst Deborah Weinswig called the company’s warning “prudent” given the tough pricing and macro environment and advised investors to remain on the sidelines until the company’s fundamental operations improve. Safeway
, which is also trying to lure shoppers with aggressive pricing and promotions, reports second-quarter earnings on July 23. Analysts have been expecting earnings of 57 cents a share on sales of 9.7 billion. Its stock was trading 11 cents lower, or 0.5%, at 20.80 on Thursday. Competitive pricing from generic herbicides uprooted Monsanto’s agricultural productivity segment, where sales fell 39% during its third quarter. Although the company’s robust seed business helped cushion weakness elsewhere, Monsanto
warned that profits from Roundup herbicides would drop to 1 billion from 2 billion in 2009 and announced the elimination of 900 employees as it works to determine the best plan of action for Roundup. Shares were down by 4.0% at Wednesday’s close and were down by 1.93, or 2.5%, at 74.26, during Thursday’s afternoon trading session.
Thomson Reuters contributed to this article.