Hormel Foods Misses Q4 Sales Expectations, Turkey Woes Gobble Up Growth Prospects

Hormel Foods Corporation HRL shares are trading lower on Wednesday.

The company reported that fourth-quarter adjusted earnings per share were 42 cents, which is in line with the street view. Quarterly sales of $3.138 billion missed the analyst consensus estimate of $3.144 billion.

Gross Profit in the quarter under review totaled $521.230 million, compared with $514.425 million a year ago.

“The combination of underlying business strength and the capture of $75 million in operating income benefit from our Transform and Modernize (T&M) 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,”  said Jim Snee, chairman of the board, president and chief executive officer.

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The company expects to realize an incremental $100 million to $150 million in benefits from the T&M initiative in fiscal 2025, as the planned expansion of the program accelerates value returned to the organization.

The T&M initiative aims to transform the supply chain, reduce portfolio complexity, and invest in data, technology, and processes.

Considerable volume declines in turkey exports resulted in lower volumes compared to the prior year in the International segment. 

The T&M initiative is key to achieving the company’s goal of $250 million in annual operating income growth by fiscal 2026.

Cash on hand increased to $742 million at fiscal year-end from $737 million at the beginning of the year. Inventories at fiscal year-end were $1.6 billion, a decrease of $104 million from the beginning of the year. Total long-term debt, including current maturities, was $2.9 billion at fiscal year-end.

Outlook: Hormel Foods has projected net sales for FY25 to range between $11.9 billion and $12.2 billion, compared to the $12.23 billion estimate.

The company also expects adjusted diluted earnings per share to be between $1.58 and $1.72, compared to the $1.68 estimate.

Price Action: HRL shares are trading lower by 3.68% to $30.65 premarket at last check Wednesday.

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