Conagra Brands’ transportation costs are inflating at about double the rate the company planned for fiscal 2027, CFO Dave Marberger said on its first-quarter earnings call. He attributed the increase to the driver shortage and higher oil prices.
Conagra still expects total cost inflation of 5% to 6% for the year, toward the higher end of that range. Lower protein costs came in below plan, but that benefit was more than offset by transportation costs, Marberger said.
The company expects inflation to rise in the second and third quarters before easing in the fourth. Conagra expects inflation to rise in its fiscal second and third quarters before easing in the fourth. Its quarterly filing said higher oil prices and logistics and fuel costs increased expenses during the quarter. Lower commodity prices, tariff refunds, productivity efforts and targeted pricing offset some of the impact.
Conagra expects to have more targeted price increases in place by the end of the first half of fiscal 2027. Gross margin fell 50 basis points to 23.8% on net sales of $2.6 billion, down 1.4%. The company reaffirmed its full-year guidance.
CEO John Brase said the company’s volume forecast does not count on competitors raising prices too. “We have not assumed any followership in our pricing moves,” he said.
McCormick raised its cost inflation forecast a day later to 6% to 7% for the year, up from a mid-single-digit increase. CFO Marcos Gabriel cited “freight costs due to fuel as well as capacity constraints in the US.” McCormick spent a $28 million tariff refund on freight and ingredient costs earlier this year.
Other consumer companies named oil or freight costs last month:
Shein’s fulfilment expenses reached 50.4% of second-quarter net revenue, up from 43.1%. It absorbed the costs instead of raising prices.
Kimberly-Clark expects $30 million to $40 million in added costs in the third quarter, partly from freight and logistics prices in North America, per Supply Chain Dive.
Colgate-Palmolive may see higher oil prices raise its material costs late in the fourth quarter.
General Mills named freight among its cost pressures. CFO Kofi Bruce expects inflation of about 6% in the fiscal fourth quarter.
RH plans to spend $50 million of its tariff refund on supply chain costs it tied to oil prices.
