News

ConAgra steps away from $5B private label business effort

Packaged food titan ConAgra Foods is stepping away from the private label business to focus on its consumer brands and intends to be much more strident in boosting margins.

June 30, 2015

Packaged food titan ConAgra Foods is stepping away from the private label business to focus on its consumer brands, and intends to be much more focused on boosting margins, along with potential acquisitions and further divestitures, according to a Wall Street Journal report Tuesday

The news comes on the heels of a push by an investor, Jana Partners LLC, to revamp ConAgra’s board and fix problems resulting from ConAgra’s buy of Ralcorp Holdings in late 2012. The $5 billion purchase of the private label operation has already cost ConAgra $2 billion, according to WSJ. Jana Partners holds a little more than a 7 percent stake in ConAgra, which is known for its Slim Jim snack line, Wesson cooking oil and Lamb Weston potato business.

ConAgra’s newly christened CEO, Sean Connolly, said continued efforts to make the private label business work would be a "suboptimal use of our resources," reports the WSJ.

The news apparently is making shareholders happy as stock rose 3.2 percent after the announcement. It also didn’t hurt that the company on Tuesday reported fourth quarter results in sync with analyst expectations. The commercial foods segment increased 6.6 percent, though sales of snacks, cereal, pasta and condiments dipped about 1 percent.

"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," Connolly said in a statement, according to Reuters. Connolly took the helm this past April.