Conagra Brands, Inc. reported a challenging second quarter for fiscal year 2026, marked by a net loss of $664 million driven primarily by non-cash goodwill and brand impairment charges, but reaffirmed its full-year guidance reflecting confidence in its strategic path forward.
For the quarter ending November 23, 2025, Conagra’s net sales declined 6.8% to $3 billion, including a 3% organic sales decrease and a 3.9% impact from mergers and acquisitions. The company faced a 313 basis point drop in gross margin to 23.4%, pressured by inflation in cost of goods sold and lost profit from divested businesses. Adjusted operating margin stood at 11.3%, while reported operating margin was negative 20.1%, reflecting the impairment charges.
CEO Sean Connolly acknowledged the difficult consumer environment but highlighted ongoing momentum driven by innovation, increased merchandising, advertising investments, and supply chain resilience. “We are well positioned to return to organic net sales growth in the second half,” Connolly said.
Segment results showed mixed performance. The Grocery & Snacks segment saw an 8.5% sales decline and a 21.8% drop in adjusted operating profit to $231 million. Refrigerated & Frozen sales decreased 6.5%, with adjusted operating profit down 35.6% to $128 million. The International segment’s sales fell 5.4%, while Foodservice sales dipped 1.3%, with adjusted operating profit down 12.6%.
Conagra incurred $968 million in non-cash goodwill and brand impairment charges, largely due to a sustained decline in share price and market capitalization. Adjusted net income was $218 million, or $0.45 per diluted share, compared to a reported loss per share of $1.39.
The company generated $331 million in net cash from operations in the first half of fiscal 2026, down from $754 million the prior year, and reduced net debt by 10.1% to $7.6 billion. Free cash flow declined to $113 million.
Conagra reaffirmed fiscal 2026 guidance, projecting organic net sales growth between -1% and 1%, adjusted operating margin of 11% to 11.5%, and adjusted EPS between $1.70 and $1.85. The company anticipates continued cost pressures from inflation and tariffs, estimating total cost of goods sold inflation near 7%.
