The king of canned ravioli is getting worried about the increasing price inflation brought on by the COVID pandemic.
Conagra Brands, the parent company of Chef Boyardee, warned investors this week that higher costs of materials and shipping will cut into its quarterly profits.
The company on Thursday reported its second-quarter results, which missed market expectations for quarterly profit, sending its shares down 4%, according to Reuters. Quarterly sales, however, rose 2% to $3.06 billion.
Conagra explained to investors that profits declined more than originally anticipated as the company experienced higher-than-expected levels of inflation.
CEO Sean Connolly said the company expects inflation to remain a factor into the second half of the year, according to Food Business News.
"There is a lag in timing between the impact of inflation and our ability to execute pricing adjustments based on that inflation," Connolly said. "As a result, the incremental price increases will go into effect in the second half of the year with the most significant impact during the fourth quarter."
The company originally projected gross inflation during 2022 would be approximately 11%, but now it thinks that number is more like 14%.
"We expect to continue experiencing cost pressures above original expectations in the second half of fiscal 2022," Connolly said in a statement.
Related
In addition to Chef Boyardee, other brands under the Conagra umbrella that could see price hikes include Duncan Hines, Healthy Choice, Hunt's, Slim Jim, Orville Redenbacher, Marie Callender's, Hebrew National, Reddi-wip, Vlasic, Birds Eye, Swiss Miss, Log Cabin, Manwich and La Choy.
Even with price increases, Conagra said it expects demand for its products to remain elevated versus historical levels as consumers have developed new habits during the COVID-19 pandemic.
LISTEN on the Audacy App
Sign up and follow Audacy
Facebook | Twitter | Instagram