(Reuters) -Conagra Brands beat Wall Street estimates for first-quarter sales and profit on Wednesday, as the U.S. packaged food maker benefited from resilient demand for its pantry staples such as Slim Jim meat snacks and Act II popcorn.
Shares were up about 3% in early trading after the company also maintained its annual forecasts, betting on the trend of consumers opting to cook at home due to higher living costs.
The results, which analysts said were "better than feared", come as tariff-induced
higher prices and macroeconomic uncertainty pose a threat to demand, along with competition from cheaper private-label brands.
"We continue to navigate a challenging environment as we're still dealing with persistent inflation and tariffs, both of which have drifted higher than our original expectations," CEO Sean Connolly said in a statement.
"Against that backdrop, consumer sentiment remains weak and we still see value-seeking behavior."
Conagra expects an overall rise in the "low-7% range" for cost of goods sold, including a 3% hit from tariffs, compared with its prior forecast of about a 7% overall increase.
The company expects to mitigate some impact through cost-saving initiatives, sourcing alternatives, pricing actions, among others.
It also warned that tariff-driven pricier inventory would weigh on the current-quarter's operating margins. Gross margin fell 212 basis points to 24.3% in the first quarter.
Conagra's quarterly revenue fell 5.8% to $2.63 billion for the quarter ended August 24, beating analysts' average estimate of $2.62 billion, according to data compiled by LSEG.
Its quarterly adjusted earnings of 39 cents per share exceeded expectations of 33 cents.
(Reporting by Anshi Sancheti and Neil J Kanatt in Bengaluru; Editing by Shreya Biswas and Sriraj Kalluvila)
