Add Chef Boyardee and Healthy Choice frozen dinners to the long list of retro packaged foods that have fallen back into favor with a nation under a coronavirus quarantine.
“What we saw was right around mid-March, the consumption just skyrocketed. In some cases it went over 100%. What was happening there is you had consumers really starting to realize this was going to be a protracted situation in stocking their pantries, freezers and refrigerators,” Conagra Brands CEO Sean Connolly said on Yahoo Finance’s The First Trade.
In addition Chef Boyardee and Healthy Choice, Conagra sells products under other well-known brands Duncan Hines, Birds Eye, Hunt’s and Slim Jim. To Connolly’s point, demand appears to be off the charts at the moment.
Conagra Brands recently told investors on its late March earnings day that retail sales increased 47.4% for the four weeks ended March 22. For Conagra’s current quarter, it expects product shipments to be up about 50% from a year ago.
The strong demand from consumers has continued beyond mid-March, but at a little slower pace.
“So it has come down off that peak a bit. Last week we met with investors and published an 8-k with one week of data and I think that was through March 29, our consumption was up over 30% that week. So not the peak we saw when it [the coronavirus pandemic] first broke, but still very, very significant.”
Within that release a week ago, Conagra noted frozen food sales increased 17.5% for the week ended March 29. Sales of meals gained 14.5%, snack sales rose 11.4% and staples sales surged 55.3%.
Connolly believes demand for Conagra’s foods will “remain elevated” until people start leaving their home.
As no surprise, Conagra has been one of the hotter trades in packaged food this past month — the stock has surged 35% or so.
“We believe Conagra will be a strong near-term beneficiary of increased food at home consumption,” said JPMorgan analyst Ken Goldman in a new note to clients. Goldman rates Conagra shares at an Overweight, meaning he expects the stock to outperform its peer group. Out of the 19 sell-side analysts that cover Conagra, 10 rate the stock a Buy and nine rate it a hold, according to Bloomberg data.
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