Conagra Brands, Inc. (NYSE:CAG) Q3 2023 Earnings Call Transcript

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But a lot of what we do to drive buzz on our brands is what I talked about at CAGNY, which is really finding real people who use our brands to tell their story of how our brands fit in their life in their own words very authentically. We call those people irrefutable advocates. They live on TikTok, in Insta, things like that, and they — we build relationships with them, and they tell our story. And — it’s incredibly efficient, which is why you see our A&P line look lighter than you see in companies that use traditional tools because it’s far more efficient than traditional in-line media, which is not only expensive, but it’s heavily ineffective. So we’ve done that. I just saw some new stuff for my team yesterday that’s coming on a couple of our brands that I’m very excited about.

And we’re just going to continue — this is an evolution in terms of this digital marketing and the irrefutable advocates. We love it. We think it works for us, and we’re going to continue to drive it hard.

Nik Modi: SP1 Great. And just one just quick question. How long do you think it will take to get back to fill rates that were in line with the pre-pandemic levels? I mean do you guys have any visibility or time line on that?

Sean Connolly: We’re — frankly, we’re there on some categories right now. So we gave you the north of 90% number, but this is a pretty vast portfolio, as you know. And so the way you should interpret that is that, that 90-ish number at the portfolio level has embedded in it in some categories and brands that are already back to which is best-in-class where we’ve already been. Equally, we have had manufacturing disruptions that we talked about quite a bit today that we’re still on allocation or we’re still replenishing stock on the shelf, and we have to do that before it’s even in a scan. So you put those all together and you get that low 90 service level, the transitory stuff with the manufacturing disruptions we’ve got it contained, we’re ramping it up. And so that average that we quoted today should improve from here. Dave, do you want to…

Dave Marberger: Yes, just one thing to add, Nik, the — our inventory levels and our days on hand, our safety stocks are finally back to pre-COVID levels where we want them. So we’re in really good shape with our a couple of categories, which we’ve talked about, where we’re still working through it. But overall, I feel really good about where we are now with our inventory levels.

Operator: Thank you. And our next question comes from Peter Galbo with Bank of America. Please go ahead.

Peter Galbo: Sean, I just wanted to clarify one of your comments. I think in your prepared remarks and talking about more of the recent Nielsen data you said you expected an acceleration kind of going forward in that data. But then if we just look at the 4Q guidance, obviously, there’s a decel in the sales growth rate. So maybe you can just clarify that for us quickly.

Sean Connolly: Well, what I’m really getting at there is relative to Q3. I mean, we — as I pointed out in my prepared remarks, we had — there’s a lot of noise in the year-on-year quarterly data in Q3, both for us and peers. And we had some of the supply chain things hit us in Q3. So as we wrap some — get past some of the unusual comps. We had some strong comps on big businesses in Q3. We move into Q4. The profile of the comps change on some of our big businesses, plus you’ll see we get back in stock on some of these canned categories where we’ve had canned fish, where we’ve had some limited ability supply and those conspire to show improving consumption trends. So I referenced the four-week Nielsen’s ending 3 25. Today, our units and our dollars, you’ve seen improvements, and that’s a four-week number, right?

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