Conagra Brands has reported results for the third quarter of the fiscal year 2020, which ended on Feb. 23, 2020. All comparisons are against the prior-year fiscal period unless otherwise noted. Third-quarter net sales decreased 5.6% to $2.6 billion, while organic net sales decreased by 1.7%, driven by a 1.3% decline in volume and an unfavorable price/mix impact of 0.4%. Volume was below planned levels in the quarter as the company’s retail and foodservice businesses experienced broad-based category softness early in the quarter. Price/mix was unfavorable as additional price promotions and increased retailer investments more than offset favorable mix.
Gross profit decreased 9% to $684 million in the quarter, and adjusted gross profit decreased by 10.5% to $699 million. The decreases were primarily driven by higher input costs, higher levels of brand-building investments with retailers, lower sales volume, higher inventory write-offs, and the lost profit associated with the sold businesses, partially offset by realized productivity and cost synergies.
To date in the fourth fiscal quarter, the company has experienced significantly increased demand in its retail businesses, associated with the COVID-19 pandemic; the company has also begun to experience declines in foodservice demand. The supply chain has executed very well to date to meet the needs of customers and consumers. Conagra expects to exceed prior full-year guidance for total-company sales and profit metrics, assuming the end-to-end supply chain continues to operate effectively.
“Through the third quarter, we remained squarely on track to deliver on our fiscal 2020 operational objectives, and our third-quarter results were in line with our updated expectations,” said Sean Connolly, president and CEO of Conagra Brands, in the press release. “In more recent weeks, the entire team at Conagra Brands has been focused on supporting our customers, consumers, employees, and communities in the face of the COVID-19 pandemic. While we are still early in our fourth quarter, we have seen significantly elevated demand for our retail products as consumers have started filling their pantries for more at-home eating. On a quarter-to-date basis, shipments and consumption in our domestic retail business have increased by approximately 50%, which have more than offset the impact of worsening trends in our foodservice business. Our teams have remained agile in responding to the elevated demand, and our supply chain has performed extremely well to fulfill customer orders.”