Conagra Brands Inc (NYSE:CAG) stock fell 1.76% (As on October 3, 11:17:27 AM UTC-4, Source: Google Finance) after the company fell short of Wall Street estimates for first-quarter results as budget-conscious consumers switched to lower-priced alternatives over the company’s pantry staples. U.S. packaged food companies are wrestling with the fallout of multiple price hikes since the pandemic that have pushed some shoppers to opt for cheaper private-label brands. The frozen meals and Slim Jim beef jerky maker’s total organic sales volumes fell 1.6% in the quarter after decreasing 1.8% in the fourth quarter. Volumes at the grocery and snacks unit, which accounts for most of Conagra’s revenue, dropped 1.8%, while they fell 11.1% in its foodservice segment. The adjusted gross profit decreased 9.4% to $726 million. First quarter gross profit decreased as higher productivity was more than offset by the negative impacts of lower organic net sales, cost of goods sold inflation, and unfavorable operating leverage. Additionally, gross profit was negatively impacted by approximately $11 million due to the temporary manufacturing disruptions in the Hebrew National business. Gross margin decreased 189 basis points to 26.5% in the quarter, and adjusted gross margin decreased 163 basis points to 26.0%. Adjusted net income attributable to Conagra Brands decreased 20.0% to $253 million. Adjusted EBITDA decreased 13.8% to $528 million in the quarter, primarily driven by the decrease in adjusted operating profit.

Moreover, net sales for the Grocery & Snacks segment decreased 1.7% to $1.2 billion in the quarter. The reported and organic net sales for the Refrigerated & Frozen segment decreased 5.7% to $1.1 billion in the quarter as price/mix decreased 5.8%, primarily attributable to an increase in strategic investments, and volume increased 0.1%.

CAG in the first quarter of FY 25 has reported the adjusted earnings per share of 53 cents, missing the analysts’ estimates for the adjusted earnings per share of 60 cents, according to data compiled by LSEG. The company had reported the adjusted revenue decline of 3.8 percent to $2.79 billion in the first quarter of FY 25, missing the analysts’ estimates for revenue of $2.84 billion. Conagra also cited a $27 million hit to results from temporary manufacturing disruptions in its Hebrew National hot dog business.

The company has reaffirmed its fiscal 2025 guidance reflecting organic net sales to be of (1.5)% to flat compared to fiscal 2024, adjusted operating margin to be between 15.6% and 15.8%, Adjusted EPS to be between $2.60 and $2.65 and free cash flow conversion to be of approximately 90%