Hormel Foods is optimistic about its outlook for the remainder of the year as it plans additional price hikes to make up for some of last quarter’s losses, the company said. Shared on Thursday’s earnings call.
Owners of Spam, Jenny O’Turkey and Skippy Peanut Butter reported net sales of $3 billion for the period ending April 30, down 3.8% from the same period last year. Retail sales volume decreased by 7.1% year-on-year. Despite recent challenges, the company has reaffirmed its goal of growing sales by 1-3% from his fiscal 2023.
The company plans to implement “targeted pricing actions” on retail items at the end of the third quarter and continues to evaluate its decision on rising inflation. CEO Jim Snee told Wall Street analysts.
“In addition to controlling costs and driving supply chain thrift through continuous improvement programs, our inflation-matched pricing efforts have led to incremental improvements in our margins,” he added.
Hormel’s pricing comes as costs continue to rise for meat and snacks, two categories in which the Minnesota-based company has a large presence. Hormel Chief Financial Officer Jacinth Smiley said on a conference call that the need for higher prices was due to rising grain and beef prices and cold storage constraints, even as freight truck costs were improving. .
Deanna Brady, vice president of Hormel’s retail group, told analysts the company’s pricing helps control expenses but is cautious about what higher costs mean to consumers. rice field.
“We are very careful not only to protect our margins, but also our relationship with our consumers,” Brady said. “By providing retailers with the right information to back up the price increase, we were able to reach an agreement and move forward.”
The company said the impact of bird flu continues, killing millions of birds and hurting turkey sales. Smiley said on a conference call that the company expects Jenny O’Brand’s turkey sales volume to fully recover in the second half of the year.
Hormel has a vested interest in growing Planters’ presence and sales, and its $3.35 billion acquisition of Planter from Kraft Heinz in 2021 will be the largest deal in the company’s history. .
Sunee said the company worked to restructure distribution of its peanut brand in the last quarter, resulting in an 8% increase in shipments. One of the ways the company is building momentum for its brand is through flavored products such as cinnamon brown sugar, dill pickles and rosemary and sea salt cashews, which debuted in May. Sunee said data from the past 13 weeks showed planters outperforming the packaged nuts and seeds category.
