(Reuters) -Conagra Brands’ first-quarter results missed Wall Street estimates on Wednesday as budget-conscious consumers prioritized spending on lower-priced alternatives over the company’s higher-priced pantry staples.
Shares of the company, which maintained its annual forecasts, were down about 3% in premarket trading.
Conagra, like other U.S. packaged food companies, has seen demand take a hit from prior price hikes on its frozen meals and Slim Jim beef jerky, with shoppers opting for cheaper private label brands.
The company’s total organic sales volumes fell 1.6% in the first quarter after decreasing 1.8% in the fourth quarter.
Volumes at Conagra’s grocery and snacks unit, which accounts for most of the company’s revenue, fell 1.8%, while its foodservice segment volumes dropped 11.1%.
Temporary manufacturing disruptions during the quarter in the company’s Hebrew National hot dog business resulted in a $27 million hit to its first-quarter results, Conagra said.
The company’s first-quarter net sales fell 3.8% to $2.79 billion. The average analyst expectation was $2.84 billion, according to data compiled by LSEG.
On adjusted basis, Conagra earned 53 cents per share, missing estimates of 60 cents.
The Duke’s mayonnaise maker’s quarterly gross margin fell 189 basis points to 26.5%.