1. Conagra sales grow exponentially
Conagra yesterday provided insight into its weekly sales trends in March and the cadence of sales before and after the COVID-19 impact. Conagra's sales at retail accelerated from +0.7% YOY for the week ended March 1 to 100.2% three weeks later, as seen in the chart below. As management said on the call, the raiding of grocery shelves has been a boon for introducing or reacquainting consumers with a variety of products that could change consumer's shopping behaviors beyond the current period. Our understanding is that Western European grocery sales have seen a similar trend but smaller in magnitude, which will likely boost Nomad Foods, among others. Conagra said its sales to the foodservice segment, in contrast, was down 50-60%, which is a negative read-through for Sysco. We made Nomad Foods the best idea long yesterday with our presentation scheduled for April 13.
2. Local bar sales bounce
After plummeting as low as down 65.8% YOY on March 22, sales at local bars recovered somewhat to down 36.5% YOY on March 25. The difference is likely in large part due to lapping the NCAA men’s basketball tournament last year as the less bad results are lapping days last year without games. Bars in some states have been allowed to sell packaged mixed drinks to help generate revenue, but the majority of sales are food. The following chart is the daily average revenue of local bars YOY from Womply, a CRM software provider.
3. Who is feeling the brunt of the economic hit?
According to a Pew Research Center poll, one-third of Americans say that someone in their household has lost a job or taken a pay cut due to the coronavirus. It is affecting the young, less educated, lower-income, and Hispanics more than other segments. The direct payments to individuals in the Cares Act are progressive in that it is phased out at higher income levels. However, it does require people to have filed a 2018 or 2019 tax return and requires social security numbers, so some with low incomes or perhaps cash earners who don't file returns and Dreamers will not receive payments.
