Conagra Brands, the Chicago-based food giant known for popular products like Birds Eye and Duncan Hines, announced plans to close its decades-old pie filling plant located in Fennville, Michigan, by the end of June 2025. This decision will affect approximately 85 employees at the facility, which primarily produces various pie fillings.
In explaining the reasons for the closure, Conagra spokesman Dan Hare shared insights with WWMT-TV in Kalamazoo, stating that the move is motivated by the company's necessity to "operate our overall operations and facility footprint as effectively and efficiently as possible." This restructure marks a strategic shift in response to the ongoing challenges faced by the food industry.
As part of the operational changes, Conagra confirmed that production of the pie filling will be relocated to another facility. However, specific details regarding this transition have not yet been disclosed.
This closure is not an isolated incident for Conagra; it follows the recent shutdown of their Birds Eye frozen vegetables plant in Beaver Dam, Wisconsin, in April 2024, which also impacted a significant number of workers, totaling 252. These operational shifts reflect the company's efforts to streamline its processes amid an increasingly challenging consumer environment.
Additionally, facing broader market pressures, Conagra has revised its full-year sales forecast. The company projected organic net sales to decline by approximately 2%, a notable adjustment from their previous guidance which had hoped for a potential decline of 1.5% at worst to flat sales at best. Unfavorable supply chain disruptions have been largely attributed to this adjustment.
Moreover, Conagra has lowered its outlook for adjusted earnings per share to $2.35, down from a previously estimated range of $2.45 to $2.50. The adjusted operating margin forecast has similarly decreased to approximately 14.4%, slightly below the last year’s performance of 14.8%.
During the second quarter results announcement back in December, Conagra Brands president and CEO Sean Connolly pointed out that the company is grappling with a "continued challenging consumer environment." This has undeniably impacted their sales performance across multiple product lines.
Looking back at the previous quarter ending November 24, 2024, net sales dipped by 0.4%, totaling $3.2 billion. While gross profit remained stable at $847 million, adjusted gross profit fell by 2.3% to $842 million due to rising costs and negative impacts from goods sold inflation and unfavorable operating leverage.
The financial reports also indicated that diluted earnings per share have come down to $0.59, marking a 1.7% year-on-year decrease, while adjusted EPS stood at $0.70, down 1.4% from the preceding year. These figures illustrate a concerning trend for the company in the context of broader economic challenges.
Thus, the decision to shut down the Fennville facility serves as a stark reminder of the tumultuous landscape currently affecting the food industry, driven by changing consumer preferences and supply chain issues. As Conagra continues to adjust its business model, the impact on workers and local communities remains a critical concern moving forward, especially for those directly affected by these closures.
While some may view Conagra’s moves as necessary for long-term viability, others are left grappling with the immediate impacts of job losses and economic uncertainty in their communities. The future trajectory for Conagra and its capacity to navigate these turbulent waters will hinge on the strategic decisions they make in the months ahead.
