MW Hormel's stock slumps as sales are still being hurt by weak turkey prices

By Ciara Linnane

Branded food company has grappled with weak whole-turkey prices all year

Hormel Foods Corp.'s stock fell 3.2% early Wednesday, after the parent of brands including Jennie-O and Spam posted weaker-than-expected sales for its fiscal fourth quarter, weighed down by a continued slump in turkey prices.

Austin, Minn.-based Hormel $(HRL)$ has been beset by lower prices for whole-bird turkeys all year, as well as a production interruption at a Planters facility in Virginia and lower center-store and contract manufacturing volumes.

Chief Executive Jim Snee said the company's cost-cutting and modernizing program is yielding results.

"The combination of underlying business strength and the capture of $75 million in operating income benefit from our Transform and Modernize initiative helped to offset a dynamic consumer environment, the steep decline in whole bird turkey commodity markets, and the production disruption at our Suffolk, Virginia, facility," Snee said in prepared remarks.

The company posted net income of $220.2 million, or 40 cents a share, for the quarter to Oct. 27, up from $195.9 million, or 36 cents a share, in the year-earlier period.

Adjusted for one-time items, the company had EPS of 42 cents, matching the FactSet consensus.

Sales fell to $3.138 billion from $3.198 billion, just below the $3.142 billion FactSet consensus.

In the retail segment, volume fell 6%, sales fell 4% and segment profit was up 29%. Sales rose at brands including Hormel Black Label bacon, Applegate meats, Jennie-O ground turkey, and SPAM.

In the foodservice segment, volume rose 2%, sales were up 1% and segment profit was down 8%. In international, volume was down 10%, sales were up 1% and segment profit was up 184%.

The company is now expecting sales of $11.9 billion to $12.2 billion for fiscal 2025 and for adjusted EPS to range from $1.58 to $1.72.

The FactSet consensus is for 2025 EPS of $1.68 and sales of $12.2 billion.

The stock is down 0.9% in the year through Tuesday's close, while the S&P 500 has gained 27%.

-Ciara Linnane

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December 04, 2024 08:13 ET (13:13 GMT)

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