Inflation Insights: Contradictions in Pricing Strategy, Gross Margins, and Volume Growth from 2025Q3 to Q4

Inflation Impact and Strategic Focus:
- Conagra Brands experienced over $2 billion in higher total delivery costs due to six consecutive years of inflation above historical norms.
- The company is prioritizing volume growth over margin expansion, focusing on frozen and snacks categories despite inflation, which is currently 4% core and 11% for fiscal '26 and '25 combined.

Supply Chain Resiliency Investments:
- Conagra is investing in supply chain resiliency, including a new chicken plant, to repatriate outsourced production and reduce costs.
- These investments aim to ameliorate supply constraints and support long-term margin expansion.

Dividend and Capital Allocation:
- The company anticipates repaying $700 million in debt through fiscal '26, with $600 million from divestitures and $100 million from operational cash flow.
- Despite maintaining its dividend, Conagra plans to continue investing in the business, balancing debt repayment with infrastructure improvements.

Pricing and Volume Strategy:
- Conagra is focusing on value-driven investments to drive volume growth in core frozen and snacks categories, despite potential elasticity challenges.
- The company is taking inflation-justified pricing in categories like canned foods, where tariffs have led to significant inflation.