Packaged foods giant Conagra Brands (CAG 1.12%) updated its full-year guidance targets on Monday, lowering many targets due to weak sales in the fiscal third quarter.

Lower 2020 targets

The maker of staple food brands such as Hunt's, Chef Boyardee, and Orville Redenbacher's saw weak orders from restaurants in the holiday season, followed by soft retail results in January. Management had expected tough year-over-year comparisons in the third quarter, which closes its books on Feb. 23, but the difficulties in certain categories ran deeper than anticipated.

Full-year sales for the fiscal year 2020 are now seen rising by approximately 10% to $10.52 billion. Conagra's former guidance target had pointed to 12.7% growth, landing near $10.75 billion. The current analyst consensus calls for roughly $10.71 billion. Organic net sales should rise by roughly 0.3%, down from 1.3%.

Operating margins for the full year are now expected to stop near 16%, down from 16.5%. The adjusted earnings target was reduced by 4% to $2.04 per diluted share. Here, analysts had been looking for $2.11.

Conagra Brands' corporate logo in red, green, and blue.

Image source: Conagra.

Management sees brighter days ahead

Conagra made no changes to its long-term goals, aiming for organic sales growth of roughly 1.5% per year over the next three years at an adjusted operating margin near 18.5%. The company is still looking for adjusted earnings in the neighborhood of $2.71 per share in fiscal year 2022.

CEO Sean Connolly expressed disappointment over the soft third-quarter sales but saw the trends turning around to healthy organic growth in the fourth quarter.

"We have gained share in many of our categories during the quarter and, based on our analysis, believe the recent consumption weakness is abating," Connolly said in a prepared statement. "We remain confident in our brands, the proven Conagra Way playbook, and the long runway of growth ahead."