ConAgra reports quarterly loss over impairment charges on private label business

US-based ConAgra Foods has recorded a quarterly loss as the company reclassified the assets of its private business as discontinued operations.

The firm reported an attributable net loss of $1.24bn in the quarter, as the private business posted a loss of $1.41bn.

Of total sales, the commercial foods unit contributed 39.3% in the quarter. The unit includes brands such as Lamb Weston frozen potatoes, which are sold to food service establishments. Its operating profit grew 17% to $139m.

ConAgra, which bought the private label business in 2012 for $5bn, announced its intention to sell the arm in June. It is expecting to close the sale by the end of the year.

The company has recognised a $1.95bn impairment charge for private label operations, based on preliminary estimates, in connection with the reclassification of this business into assets held for sale.

The private label unit sells products to supermarkets under their own brands. The business has been plagued by several customer-related issues.

ConAgra’s branded business, including cooking spray brand Pam, and canned pasta Chef Boyardee, has been struggling with low demand due to competition from traditional US packaged food players, such as General Mills and Campbell Soup.

ConAgra Foods CEO Sean Connolly, who took over the position in April, noted that the company intends to invest more in popular but-outdated brands, such as Marie Callender’s pot-pies, and Healthy Choice frozen dinners.

The Wall Street Journal quoted Connolly as saying: "One thing that happens when companies reduce investments in brands and in consumer insights is the brands start to atrophy. But brands are incredibly resilient…you can make them relevant to a whole new generation."