Conagra CEO Sean Connolly Steps Down, John Brase to Take Over
After 11 years at the helm, Conagra CEO Sean Connolly has announced that he will be stepping down on June 1. The news came as a surprise to investors, with Conagra stock falling 6% in late morning trading.
John Brase, currently the chief operating officer at The J.M. Smucker Co., has been named as Connolly’s successor. With 30 years of experience at Procter & Gamble, Brase brings a wealth of knowledge and expertise to his new role as CEO of the snack and meal giant.
“The decision to appoint John as Conagra’s next leader follows our thoughtful approach to succession planning, including discussions with Sean, and our determination that now is the right time for this leadership transition,” said Richard Lenny, the independent chair of Conagra’s board of directors.
Challenges Ahead for Conagra
While Brase is well-regarded by investors, there are clear challenges facing Conagra. The company reported earnings per share of $1.70 earlier this month, in line with expectations. However, there are “mounting earnings pressures to consider,” including inflation, particularly in freight and packaging, which could impact CAG’s earnings recovery next year.
Analysts are also concerned about lackluster volume growth, with volume only growing by 0.5% in the third quarter. Stifel analyst Matthew Smith pointed out that there is limited balance sheet flexibility, given the current leverage against the improved volume trajectory in the Refrigerated & Frozen segment.
The Refrigerated & Frozen segment includes brands like Marie Callender’s and Birds Eye, which showed the most growth last quarter, up 0.6%. In contrast, other categories like grocery and snacks, international, and food service saw declines of 2.2%, 2%, and 0.1%, respectively.
Wall Street’s Stance on Conagra
The Street remains cautious on Conagra stock, with one Buy rating, 12 Holds, and four Sells. Analysts are closely monitoring the company’s performance and will be looking to see how Brase navigates the challenges ahead as he takes on the role of CEO.
