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Overview of Conagra Brands' Q2 Results

On December 19, 2025, Conagra Brands, Inc. (NYSE: CAG) released its financial results for the second quarter of fiscal year 2026, which concluded on November 23, 2025. This quarter has shown significant struggles for the company, with net sales falling 6.8% to approximately $3.0 billion, alongside increased operational challenges.

Key Highlights of the Quarter

• - Net Sales Decrease: The reported net sales decreased by 6.8% from the previous year. Organic net sales, which exclude the effects of acquisitions and divestitures, fell by 3.0%.
• - Operating Margin Decline: Articulated in the operating insights, the operating margin reported a startling (20.1)% while the adjusted operating margin stood at roughly 11.3%.
• - Financial Losses: Conagra Brands reported a diluted loss per share of $1.39, primarily owing to non-cash goodwill and brand impairment charges, contrasting starkly with an adjusted earnings per share (EPS) of $0.45 for the quarter.

CEO's Comments

Sean Connolly, the company’s President and CEO, expressed cautious optimism by stating, "Despite navigating a tough consumer environment, we are pleased with the underlying momentum we're witnessing within the business. Our innovation pipeline and increased marketing investments position us well for the future."

Breakdown by Product Segments

Each of Conagra's business segments presented unique challenges this quarter:

• - Grocery & Snacks Segment: Reporting revenues of $1.2 billion, this segment saw an 8.5% decline in sales. The decrease was attributed to a 7.0% impact from divestitures and a 1.5% drop in organic sales, heavily influenced by a 2.3% decrease in volume.

• - Refrigerated & Frozen Segment: This segment experienced a sales drop of 6.5% to $1.3 billion, with organic net sales dropping 5.1% while also suffering from declining volume.

• - International Segment: It reported a revenue decrease of 5.4% totaling $230 million. Notably, organic net sales in this segment fell 2.9%.

• - Foodservice Segment: The Foodservice category shrank by 1.3%, landing at $288 million in net sales, signaling a slight uptick in organic sales because of price increases.

Financial Performance Insights

The financial data for the batch elucidates the decline in gross profit by 17.8% down to $696 million, while adjusted gross profit slipped 17.1%. Gross margin is noted to have plunged to 23.4%, representing a 313 basis points drop.
Notably, the SG&A expenses demonstrated a 23.6% decrease to $325 million, while adjusted SG&A, which encompasses promotional expenses, rose 2.9% to $362 million.
The company reported significant non-cash impairment charges — just over $968 million due to brand valuation drops directly correlated with a continued decline in share price dynamics.

Looking Ahead

Despite the current setbacks, Conagra Brands has reaffirmed its guidance for fiscal year 2026, predicting organic net sales to range from a (1)% to 1% change, while aiming for an adjusted operating margin between 11.0% and 11.5%. Meanwhile, adjusted EPS is projected to be between $1.70 and $1.85.

Connolly further emphasizes, "With our keen focus on management and strategic execution, we are committed to overcoming these challenges and adapting to the ever-evolving landscape of consumer trends and preferences."

Conclusion

With an established history and a diversified portfolio that includes renowned brands like Birds Eye® and Duncan Hines®, Conagra Brands remains focused on innovation and responsiveness as it navigates through this tough quarter. The outlook for the latter half of FY2026 is cautiously optimistic as management believes upcoming initiatives may lead to a return to organic sales growth. For comprehensive details, stakeholders can access further information on their official investor relations website.