This audio is generated automatically. Please let me know if you have any comments.
Diving overview:
- Hormel had a difficult quarter in its retail segment, with net sales down 7% year-over-year, sales volume down 5% and profit down 14%, the company said in its second-quarter earnings report Thursday. .
- CEO Jim Snee pointed to the rise in the snack category as a sign of optimism, with Planters and Corn Nuts posting sales and category share gains. He said the company is doubling down on its snack business. Net sales of Spam, Applegate Meats and Hormel's Black Label Bacon increased during the quarter.
- The company attributed much of its retail decline to turkeys. Turkeys face uncertainty due to high costs and reduced demand as avian flu affects commercial flocks.
Dive Insights:
Hormel, best known for Spam, Justin's and Jenny-O, is under pressure from avian flu and an inflationary environment in which consumers are becoming more selective about what they buy.
Snee said in the company's earnings call that Hormel expects the turkey market to remain weak for the remainder of the year. This impacts the company's guidance for Jennie-O turkey products. He said the Minnesota company is also seeing a decline in demand for some canned and convenience food items, along with some items from ethnic food groups.
“We are also seeing similar softness across the global flavor verticals and within the Mexican categories in which we compete. This trend is not entirely new and our team is actively working to address this issue later this year,” said Snee.
He added that the company is doubling down on its snacking strategy with new product launches, including Planters Salt And Vinegar Cashews and Corn Nuts Loaded Taco flavors. Hormel added these brands to its portfolio as part of a “transformative” $3.35 billion deal with Kraft Heinz in 2021.
The meat and snack giant also noted its stronger performance. food service It recorded a single-digit percentage increase in sales and volume compared to the same period in 2023.
Large poultry companies like Hormel continue to deal with supply and demand fluctuations due to factors such as avian flu and pricing. The company previously announced plans to invest $250 million in its supply chain over the next three years to modernize it.
Despite Hormel's decline in retail sales, the company showed signs of improving margins outside Turkey, JPMorgan analysts said in a note to investors Thursday.
