Conagra Brands (NYSE: CAG) reported a 29% rise in quarterly profit Thursday as it cut back on promotions and jettisoned low-margin products.
Rival U.S. packaged food makers, including General Mills (NYSE: GIS) and Kellogg (NYSE: K), are struggling with sluggish demand as more consumers shift to fresh foods and products perceived as healthier.
In response, the Chicago-based Conagra – perhaps best known for Chef Boyardee brand -- has been focusing on boosting margins by adding premium products, while cutting back on discounting and raising prices in some cases.
Other brands under the Conagra umbrella include Reddi-wip, Hunt's and Slim Jim.
Selling and other expenses fell 43%, while cost of selling goods fell 9.5% in the fourth quarter ended May 28.
The company also said it would buy back an additional $1 billion in shares, taking its repurchase authorization to about $1.38 billion.
Net income attributable to the company rose to $151.3 million, or 36 cents per share, in the latest quarter from $117.6 million, or 27 cents per share, a year earlier. Net sales fell 9.3% to $1.86 billion.
Conagra and rival Pinnacle (NYSE: PF), which owns brands such as Duncan Hines, spoke weeks ago about a possible combination but adjourned those talks, with no plans to revisit the issue.
Conagra and its smaller rival were unable to agree on a price, adding that Pinnacle's expectations far exceeded what Conagra might have been willing to pay.
Conagra opened Thursday trading, heading into a long weekend at $37.15, down 22 cents from Wednesday’s close, within a 52-week range of $33.61 to $48.86
