Conagra Brands Q2 2026: Billion-Dollar Write-Downs and Revenue Declines

The packaged food industry is often viewed as a defensive safe haven, but even giants in this space are susceptible to shifts in consumer behavior and balance sheet recalibrations. Conagra Brands (CAG)—the company behind household staples like Birds Eye, Slim Jim, Healthy Choice, and Duncan Hines—recently released its latest 10-Q filing for the second quarter of fiscal 2026. The report reveals a company undergoing significant transition, marked by substantial asset write-downs and a challenging sales environment.

Let’s dig into the income statement to understand how a difficult macroeconomic backdrop and internal portfolio reshaping resulted in a significant quarterly loss.

Visualizing the Quarterly Results

To better understand how Conagra's $2.98 billion in revenue translated (or failed to translate) into profit this quarter, the following flow diagram visualizes the income statement:

The Billion-Dollar Write-Down

The most striking figure in this quarter's report is the swing from an operating profit of $402.6 million in the prior year to an operating loss of $597.6 million. This was not driven by the cost of making food, but rather by massive non-cash impairment charges.

Conagra recorded $968.3 million in total impairment charges. This includes a $771.3 million goodwill impairment charge primarily within its Refrigerated & Frozen reporting unit, and $197.0 million in intangible asset impairments for specific brands (including Birds Eye, Earth Balance, and Smart Balance).

For those new to financial accounting, goodwill impairment essentially means the company has acknowledged that certain businesses it acquired in the past are no longer worth the value recorded on the balance sheet. Management cited a "sustained decline in market capitalization" and higher discount rates as triggers for this assessment. While these are non-cash charges—meaning they don't directly burn through the company's checking account—they significantly impact reported earnings, resulting in a Net Loss of $663.6 million, or $(1.39) per share.

Revenue Under Pressure

Top-line performance also reflected a challenging environment. Net sales fell 6.8% year-over-year to $2.98 billion. This decline was driven by a combination of divestitures and organic weakness:

• Grocery & Snacks: Sales dropped 8.5% to $1.21 billion.
• Refrigerated & Frozen: Sales fell 6.5% to $1.25 billion.
• International: Sales decreased 5.4% to $230.4 million.
• Foodservice: Sales dipped 1.3% to $288.4 million.

Management noted that organic volume decreased across the board (e.g., down 3.0% in Refrigerated & Frozen and 2.3% in Grocery & Snacks). The filing attributes this to "changes in retailer inventory" and generally lower consumption trends. In plain English, consumers are engaging in "value-seeking behaviors"—buying less or trading down to cheaper alternatives—amidst continued economic pressure.

Reshaping the Portfolio

Conagra is actively pruning its brand portfolio to focus on higher-growth areas. The filing highlights the completion of two significant divestitures in the first quarter of fiscal 2026:

1. The Chef Boyardee® business: Sold for net proceeds of approximately $607 million.
2. The Frozen Fish business: Including the Van De Kamp’s and Mrs. Paul’s brands, sold for roughly $42 million.

While these sales generated cash, they naturally create a headwind for year-over-year revenue comparisons. The company is using proceeds to pay down debt, specifically prepaying term loans and settling senior notes.

Looking Ahead

Conagra’s latest filing paints a picture of a company "clearing the decks." By taking the massive impairment charge now, the company aligns its book value with market realities. However, the operational challenges remain real. The company highlighted risks related to input cost inflation and specifically mentioned increased costs resulting from changes to trade policies (tariffs).

As Conagra navigates fiscal 2026, it faces stiff competition from private label brands and peers like General Mills and Kraft Heinz. Success will depend on stabilizing volumes in its core frozen and snack segments while managing a cost structure that is still being optimized through ongoing restructuring plans.