Conagra Brands, Inc. reported results for the second quarter of fiscal year 2022, which ended on November 28, 2021. Second quarter net sales increased 2.1%, while organic net sales increased 2.6%. On a two-year compounded annualized basis, fiscal 2022 second quarter net sales increased 4.1% and organic net sales increased 5.3%. Operating margin decreased to 13.4% and adjusted operating margin decreased to 14.6%, a company statement reads.
Gross profit decreased 15.1% to USD755m in the quarter, and adjusted gross profit decreased 14.4% to USD767m. Second quarter gross profit benefited from higher organic net sales, supply chain realized productivity, lower COVID-19 pandemic-related expenses, and cost synergies associated with the Pinnacle Foods acquisition. These benefits, however, were not enough to offset the impacts of cost of goods sold inflation of 16.4% and the lost profit from the Sold Businesses. Gross margin decreasedto 24.7% in the quarter, and adjusted gross margin decreased to 25.1%. Adjusted gross margin declined more than originally expected as the company experienced higher-than-expected cost of goods sold inflation, made additional investments to prioritize servicing orders to maximize food supply for consumers, and experienced additional transitory supply chain costs, Conagra data shows.
“Our business delivered another quarter of strong net sales growth as we continued to experience elevated levels of demand across our portfolio. I am proud of our team for continuing to demonstrate great agility in navigating the dynamic external landscape with a refuse to lose attitude and dedication to executing our Conagra Way playbook every day. Our focus on strategic innovation and our intentional approach to investment helped us maintain brand momentum in the second quarter and continue capturing share across each of our domains – frozen, snacks, and staples,” Sean Connolly, president and chief executive officer of Conagra Brands said.