ConAgra to exit private label business

ConAgra Foods, the maker of Slim Jim beef jerky and Chef Boyardee pasta, plans to exit its struggling private label foods business, which has suffered falling sales since it was bought two years ago.

ConAgra Chief Executive Sean Connolly, who joined in April, said on Tuesday it was clear trying to turn around the private label business was draining resources.

'Today ConAgra acknowledged the need to pursue a new strategic direction,” Barry Rosenstein, Jana Partners managing partner, said in an emailed statement on Tuesday. 'We look forward to our ongoing discussions with the company and its advisers.”

The activist hedge fund took a 7.2 percent stake in ConAgra this month, becoming its second-largest shareholder, and said it was prepared to nominate directors to the company's board to help address 'persistent underperformance” since the $5 billion Ralcorp acquisition in 2013.

ConAgra did not say how it would exit the private label business. The company operates a Ralcorp plant at 601 16th St. NE in Cedar Rapids that produces private label oatmeal products.

ConAgra recently received Iowa Economic Development Authority approval for incentives to support a $10 million investment in the Cedar Rapids plant, which employs over 130.

ConAgra bought Ralcorp to become the biggest maker of U.S. private label foods, which retailers market under their own brands. Its aim was to use private brands to grow as retailers such as Wal-Mart squeezed shelf space for branded products.

But cut-price deals Ralcorp had made with retailers before the takeover made it difficult for the business to meet targets, with sales falling nearly 6 percent in two years.

The business is ConAgra's smallest, accounting for a quarter of revenue in the year ended May 31. Sales in the business fell 1 percent in the fourth quarter.

ConAgra said it will focus on aggressively cutting costs while growing its consumer brands.

ConAgra's net sales rose 3.7 percent to $4.10 billion, but came in below analysts' average estimate.

Net profit was $209.2 million from a loss of $324.2 million a year earlier.