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Conagra’s purchase of Pinnacle Foods is getting some criticism as the acquirer is slowing down shipments of Pinnacle’s frozen foods. Annie Gasparro reports for The Wall Street Journal:
Conagra Brands Inc. CAG -8.26% is losing momentum in the freezer aisle, calling into question its recent $8.2 billion purchase of Pinnacle Foods.
Pinnacle’s Birds Eye vegetables and Hungry Man dinners have lost space in recent months. Conagra, which acquired Pinnacle in October, said Thursday that it was working to stop shipments of some new Pinnacle products that seemed unlikely to sell.
“Pinnacle is more negative than any of us anticipated it would be,” Conagra Chief Executive Sean Connolly said in an interview. He said it would take another year to get Pinnacle’s brands on track.
Conagra’s shares sank 17% on Thursday after the maker of Healthy Choice frozen dinners, Peter Pan peanut butter and other brands reported quarterly sales growth of $2.38 billion, up 9.7% from a year ago but below analysts’ estimate of $2.41 billion, according to FactSet. The stock had fallen 22% over the past three months through Wednesday’s close.
Conagra’s legacy frozen-food business logged sales growth of 1.8%—a slowdown from the prior two quarters. But Conagra said its in-store sales of frozen, single-serve meals like Healthy Choice rose 11% from a year ago.
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