Hormel Foods Corp. (NYSE:HRL) stock fell Thursday after the company reported mixed fiscal third-quarter results.
Earnings Results
Hormel reported adjusted earnings of 37 cents per share, beating the 35-cent consensus estimate.
However, sales of $2.96 billion missed the $3.04 billion estimate.
Adjusted operating margin expanded to 9% from 8.4% a year earlier. Operating cash flow jumped 54% to $241 million. Meanwhile, capital spending declined to $68 million from $72 million.
Hormel ended the quarter with $840 million in cash, excluding assets held for sale. Inventories increased by $54 million to $1.8 billion.
President and CEO-elect John Ghingo said lower sales reflected portfolio changes, weaker commodity pricing in some categories and continued pressure on consumers.
Hormel also agreed to sell its Brazil operations under the Ceratti brand. The sale closed early in the fiscal fourth quarter, and its expected impact is included in the company’s updated guidance.
Hormel Names New CFO
Earlier this week, Hormel appointed Ash Bhumbla executive vice president and chief financial officer, effective Sept. 8.
Interim CFO Paul Kuehneman will help Bhumbla during the transition. Kuehneman will remain a senior leader in Hormel’s finance organization.
Retail and International Sales Decline
Retail net sales fell 4%, while organic sales declined 3%. Volume dropped 9% on both a reported and organic basis. Still, SPAM, Applegate and Hormel chili recorded solid growth.
Retail segment profit fell 4% due to lower commodity turkey and private-label snack nut sales.
International net sales declined 5%, while organic sales fell 4%. Volume dropped 11%. Branded export demand remained resilient, although a one-time legal entity transition affected some SPAM export sales.
International segment profit plunged 254% due to a noncash impairment charge. However, adjusted segment profit was flat.
Foodservice Extends Growth Streak
Foodservice net sales and organic sales rose 2%. That marked the segment’s 12th straight quarter of organic sales growth.
Premium prepared proteins, branded pepperoni and Jennie-O turkey drove the increase. Austin Blues, Hormel Natural Choice and Hormel Fire Braised also performed well.
However, volume declined 1%. Segment profit increased 3%, supported by higher sales and favorable pork costs.
Updates Fiscal 2026 Outlook
During Hormel Foods’ third-quarter earnings call on Thursday, Ghingo said consumers remain strained as cumulative inflation and higher fuel costs pressure household budgets.
He said shoppers are becoming more deliberate with their spending and increasingly seeking value. The company expects consumer conditions to remain choppy in the coming months and does not anticipate a meaningful near-term improvement.
Hormel raised its fiscal 2026 adjusted earnings forecast to $1.45 to $1.51 per share from $1.43 to $1.51. The consensus estimate is $1.50 per share.
The company lowered its annual sales outlook to $12.1 billion to $12.2 billion from $12.2 billion to $12.5 billion. Analysts expect $12.26 billion.
It continues to expect organic net sales growth of 1% to 2% in fiscal 2026.
HRL Price Action: Hormel Foods shares were down 8.77% at $21.63 at the time of publication on Thursday, according to Benzinga Pro data.
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