Conagra Brands to invest US$125M in fiscal 2027 to boost supply chain, cut costs

USA – Conagra Brands has announced plans to invest an incremental US$125 million in fiscal 2027 to strengthen its supply chain and reduce costs by shifting more production in-house. 

President and CEO John Brase said the spending supports the company’s goals of improving supply chain resiliency, maintaining high service levels, and reducing inventory and days of inventory outstanding. 

“I don’t believe we’re investing enough in our brands and our supply chain, again, why you’ve seen a significant step-up and investment there,” Brase said during the July 15 earnings call. 

The investment builds on plans unveiled last year to boost supply chain resiliency spending, part of roughly $450 million in capital expenditures for the fiscal year ended May 31.  

That increase followed supply challenges in the prior fiscal year, including stalled chicken production, a frozen-vegetable shortage, and tariffs on tinplate steel used for canned-food containers. 

Conagra is now prioritizing supply chain resiliency as part of its broader plan to spend 4% to 5% of net sales on capital expenditures, according to Matthew Neisius, senior director of investor relations. 

Executives said the company is evaluating projects to strengthen its supply chain foundation while also advancing technology and artificial intelligence initiatives to streamline manufacturing operations. That effort, introduced last December as Project Catalyst, is aimed at reengineering and automating core business processes. 

“I really believe complexity can be the enemy of execution,” Brase said. “And so we’re going to really get after simplification, both in our organization and how we get work done.” 

As part of that simplification push, Conagra is reevaluating its 5,500 SKUs across its portfolio to ensure each contributes value to the enterprise, Brase said. 

“I think looking at making each SKU, each item, kind of earn their keep is going to be important,” Brase said. 

Meanwhile, Conagra reported a 3.6% increase in fourth-quarter net sales, reaching US$2.88 billion, with Grocery & Snacks segment sales up 0.3% to US$1.2 billion. 

The company posted a fourth-quarter net loss of US$1.62 billion, or US$3.37 per diluted share, compared with net income a year earlier. The loss stemmed from US$1.96 billion in non-cash goodwill and brand impairment charges. Adjusted diluted earnings per share came in at US$0.47. 

For full fiscal 2026, total reported net sales fell 2.9% to US$11.30 billion, while organic net sales dipped 0.4%. 

For fiscal 2027, Conagra guided for organic net sales change of (3)% to (1)% and adjusted operating margin between 10.0% and 10.5%. Adjusted EPS is projected between US$1.40 and US$1.50, reflecting a planned US$40 million increase in advertising and brand investments alongside continued supply chain initiatives. 

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