Sep 30, 2026 earnings call — Pricing, inflation, and SKU simplification
Conagra expects Q2 organic sales down 2% and reiterated full-year targets.
Revenue $2.6B (est $2.6B) · EPS $0.41 (est $0.28)
Key quotes
"I think we've taken a very prudent approach to our elasticity assumptions, and these assumptions remain unchanged, which is really frozen at more of a 2:1 elasticity that we've modeled for the year and Grocery & Snacks at more of a 1:1 elasticity."
"As we've discussed before, we have an extremely long tail of SKUs that we are getting after."
Analyst Q&A 12
Q2 organic sales outlook
Q (Andrew Lazar · Barclays): He asked why Conagra guides organic sales down 2% for fiscal Q2 while quarter-to-date scanner seems closer to flat. He asked if elasticity assumptions or prudence explain the weaker guide.
A: Management said the pricing is only now hitting the market and their pricing assumptions remain unchanged. They kept elasticity assumptions frozen at 2:1 generally and 1:1 in Grocery & Snacks, and they did not model competitor followership. They also said the 2% guide contemplates Thanksgiving timing and possible shipment versus consumption timing.
"I think in general, the pricing we discussed in the Q4 earnings call is really just hitting the market kind of as we speak." — John Brase (CEO)
Inflation pacing through the year
Q (Peter Galbo · BofA): He asked how updated inflation guidance (5% to 6%) will pace over the year and what the exit rate might look like into Q4.
A: Management said they're still in the 5% to 6% range for the year and now expect toward the higher end. They said proteins were favorable in Q1 but transportation inflation has accelerated (about double their prior plan), so they expect Q2 and Q3 inflation higher than Q1 and Q4 lower than Q3, with many high inflation categories wrapping into fiscal '28.
"So as we forecasted inflation, we're still in that 5% to 6% range for the year." — David Marberger (CFO)
Retail pricing and promotions
Q (David Palmer · Evercore): He asked whether pricing acceptance at retail matched their model or assumed no competitor moves. He also asked about not repeating a Sandwich Bros. promotion and whether promotional pulls are baked into guidance.
A: Management said pricing is effective in market and customer acceptance had no surprises versus planning. They said they are reviewing promotions with a real ROI mindset and will not repeat promos that were dilutive, and those promotional assumptions are embedded in the fiscal year forecast.
"We continue to look at our promotional dollars through a real ROI mindset." — John Brase (CEO)
Q2 margin drivers and gross margin
Q (Thomas Palmer · JPMorgan): He asked whether the lower margin outlook for Q2 is due to a step down in gross margin or timing of SG&A.
A: Management laid out three drivers: higher inflation in Q2 versus Q1, reversal of Q1 SG&A favorability (about $0.03 of EPS benefit, half onetime and half timing) that will hit in Q2, and increased A&P (to 3% of net sales from 2.3%). They said there will be a bit of gross margin impact from higher inflation versus Q1.
"So you will see a little bit of impact on gross margin from the higher inflation versus Q1." — David Marberger (CFO)
Deleveraging timing and target
Q (Alexia Howard · Bernstein): She asked how quickly the company will deleverage from about 4x toward the 3x target and the expected timing.
A: Management said they expect to finish the year at approximately 4x leverage and noted Q1 ended at 3.99x. They expect to pay down approximately $250 million of debt this year, are focused on getting to 3x as soon as possible, and anticipate making progress in fiscal '28 as margins and profitability improve.
"We do expect to pay down debt in the year for the full year, approximately $250 million of debt paydown is what we would expect for this year." — David Marberger (CFO)
Snacks actions and Cyclospora impact
Q (Christopher Carey · Wells Fargo): He asked what actions are planned for underperforming Snacks (popcorn, Slim Jim) and what volume or elasticity expectations are. He also asked if frozen saw any Cyclospora-related benefit.
A: Management said Sweet Treats performed very well, but meat snacks and seeds have underperformed, partly due to convenience channel pressure from higher gas prices. They plan a significant step-up in brand building and innovation for meat snacks and popcorn into Q2. On Cyclospora, they saw some benefit but said it was not material in Q1 and there were offsets in other items.
"I think what you're going to see, and you're already seeing as we go into Q2, a significant step-up in our brand building and marketing, specifically pinpointed at meat snacks and popcorn specifically there." — John Brase (CEO)
Conservatism in reaffirmed outlook
Q (Max Andrew Gumport · BNP): He asked whether the reaffirmed outlook now has extra conservatism after a Q1 beat, inflation ticking up, SG&A timing, and Ardent Mills volatility.
A: Management said the Q1 beat was driven by SG&A timing/onetime items, an Ardent Mills benefit, lower-than-expected inflation in places, and tariff refunds close to $0.01. They said the big impact for the year is accelerated transportation inflation (about double prior plans) and that frozen pricing is just starting, so they want to see how it plays out before changing the guide.
"The big impact is the acceleration of transportation inflation." — David Marberger (CFO)
Gross margin guide and frozen volumes
Q (Robert Moskow · TD Cowen): He asked whether gross margin guidance was updated given higher costs and whether frozen volume drops plus added capacity (frozen chicken) will hurt leverage and whether that is already in the numbers.
A: Management said they held their operating margin guidance for the year and that gross margin is relatively flat to the prior year. They confirmed they have modeled pricing, elasticity, frozen volume decreases and the resulting absorption impact, and included those effects in the guidance.
"We've held our guidance for operating margin for the year." — David Marberger (CFO)
SKU and brand simplification
Q (Robert Dickerson · U.S. Bancorp): He asked about SKU rationalization, exits like Celeste Pizza, whether more brands could be stepped away from, and how manufacturing footprint is being considered.
A: Management said they set up an internal work stream to significantly reduce SKU count and are exiting small, unprofitable brands like Celeste (about a 15 bps net sales impact but profit accretive). They said the larger opportunity is simplifying core platforms (example: over 400 single-serve meal SKUs), optimizing formats and formulations, and that most benefits will show in fiscal '28 after measured rollout with customers.
"Right now, we did -- we stood up an internal work stream that's really looking to significantly reduce SKU count." — John Brase (CEO)
Consumer spending trends
Q (Scott Marks · Jefferies): He asked for updates on consumer behavior and whether conditions have improved or worsened recently.
A: Management described the consumer as muted and the macro as dynamic, with behavior bifurcated by income. They said there has been no material step change, though c-stores have been more pressured by gas prices, and their portfolio can serve consumers across the value spectrum.
"I would tend to say the word that I would use is muted and it continues to be kind of bifurcated by income, no doubt about it." — John Brase (CEO)
A&P increase and interest exposure
Q (Leah Jordan · Goldman Sachs): She asked where the A&P step-up will be allocated, what's working and how returns are measured. She also asked about interest expense exposure and near-term refinancing.
A: Management said they're investing more and getting better ROI from a more targeted modern marketing approach, focusing A&P on three places: single-serve meals, meat snacks and popcorn, and are already seeing improved reach and engagement. They said they are almost 100% fixed rate (only commercial paper is variable), had two bonds due this month but financed ahead with a $500 million note issued in July at 5.4%, and are comfortable refinancing using those proceeds and borrowing capacity.
"And so as you think about where we're focusing these investments, it's really in 3 places: single-serve meals, meat snacks and popcorn." — John Brase (CEO)
Rating agencies and Ardent Mills volatility
Q (Carla Casella · JPMorgan): She asked if they speak with rating agencies and whether agencies changed views after the dividend cut. She also asked how wheat volatility at Ardent Mills flows through results.
A: Management said they talk to the agencies all the time and that agencies view the dividend cut as a positive for their credit position and are aligned with the priority to pay down debt. They explained Ardent Mills is two businesses: a stable milling business and a commodity trading business that benefits from wheat volatility (which is hard to forecast), and they have a minimum of 80% cash flow conversion on that profit.
"They obviously looked at our cut of the dividend as a positive in terms of our credit rating and our position." — David Marberger (CFO)