Conagra Brands Inc beat quarterly sales estimates as it benefited from shoppers buying more higher-priced items, fewer promotional activities and a rate hike in its foodservice business.
The ready-to-eat and frozen food industries have got a boost from rising at-home consumption during the COVID-19 pandemic as social-distancing restrictions push people to cook more at home and opt for packaged foods with long shelf lives.
Conagra's third-quarter results were underpinned by strong net sales growth in several of its snacks and staple brands, such as Orville Redenbacher's, Act II and Chef Boyardee, as well as its frozen foods including Birds Eye frozen vegetables and Marie Callender's meals.
"[Conagra is] well-positioned to sustain the benefits of the eat-at-home habits consumers have developed during the COVID-19 pandemic," chief executive officer Sean Connolly said.
The Chicago-based company said it continued to see elevated at-home consumption trends and retailers rebuilding inventories so far in the fourth quarter.
But it forecast organic sales to fall between 10% and 12% in the current quarter, saying it does expect the same frenzied shopping trends it saw a year earlier.
It expects to earn between 49 cents and 55 cents per share on an adjusted basis for the fourth quarter, largely above analysts' expectations of 51 cents, according to Refinitiv IBES data.
Net sales rose 8.5% to $2.77 billion in the third quarter ended 28 February, beating analysts' expectations of $2.72 billion, thanks to a 10.8% rise in sales of grocery and snacks and an 11.7% rise in revenue from frozen foods.
On an adjusted basis, Conagra earned 59 cents per share, a cent more than expectations.