Sean
Connolly continues to transform ConAgra since he took over as chief executive
officer, this time spinning off Lamb Weston, its frozen potato business.
Lamb
Weston has sales of about $3 billion a year.
This
will further simplify ConAgra, changing it from a rather unwieldy conglomerate
with fingers in a lot of pies.
It's also good news for farmers because they will have renewed competition from buyers.
The
split of Lamb Weston will rid ConAgra of most of its existing business selling
foods to restaurants and other commercial customers, leaving it to focus on its
dozens of grocery-store brands, which include Peter Pan peanut butter, PAM
cooking spray, Hebrew National hot dogs and Gulden’s mustard, reports the Wall Street Journal.
Connolly said the move will enable both the remaining business, to be called
Conagra Brands, and Lamb Weston both to better focus and generate stronger
growth.
“Clearly, as a company, we’ve had a lot of different things going on
and competing for management’s attention,” he said on a conference call.
“By
creating two pure-play companies, we are best positioning each to compete.”
Connolly
executed another spinoff seven months ago. The two big moves reduce ConAgra’s
annual sales from $19 billion to $9 billion, but leaves the company more
profitable.
Earlier
this month, ConAgra agreed to sell its struggling private-label business—which
makes foods for supermarkets’ in-house brands—to Treehouse Foods Inc. for
$2.7 billion—less than three years after ConAgra acquired it.
In October, it
disclosed a plan to cut $300 million in annual costs that included 1,500
layoffs, and said it would move its headquarters to downtown Chicago from
Omaha, Neb.
Mr.
Connolly has also brought in a new senior executive to streamline the company’s
supply chain.
