Hormel Foods Q1 Earnings Miss Estimates, Sales Decline on Weak Volumes

Core Insights - Hormel Foods Corporation reported a decline in both net sales and earnings for the first quarter of fiscal 2025, with adjusted earnings of 35 cents per share, down from 41 cents year-over-year, missing the Zacks Consensus Estimate of 37 cents [1][2][3] Financial Performance - Net sales totaled $2,988.8 million, a decrease of 0.3% from $2,996.9 million in the prior year, but exceeded the consensus estimate of $2,939.5 million [2] - Gross profit was $475.2 million, down from $508.7 million year-over-year [3] - Selling, general and administrative expenses rose to $263 million from $240.4 million in the previous year [3] - Adjusted operating income fell to $254 million from $294.8 million year-over-year, with an adjusted operating margin of 8.5%, down from 9.8% [3] Segment Performance - Retail unit net sales decreased by 1.1% to $1,890.1 million, with volumes down 3.7%, impacted by production disruptions [4] - Foodservice segment net sales increased by 1.9% to $930.2 million, despite a 4.7% decline in volumes, driven by premium products [6] - International unit net sales fell by 2.4% to $168.5 million, with volumes down 6.9%, although growth in China partially offset declines in Brazil [7] Strategic Initiatives - Hormel Foods is advancing its Transform and Modernize (T&M) initiative, expecting $100 million to $150 million in additional benefits in fiscal 2025 [10] - The company divested its last sow farm to reduce commodity exposure and streamline its portfolio [10] Future Outlook - For fiscal 2025, Hormel Foods expects net sales between $11.9 billion and $12.2 billion, with organic growth projected at 1% to 3% [11] - Operating income is anticipated to range from $1,118 million to $1,212 million, with adjusted operating income expected between $1,175 million and $1,275 million [12] - Annual EPS is projected to be between $1.49 and $1.63, with adjusted EPS expected in the range of $1.58 to $1.72 [13]