Key Takeaways from Hormel Foods’ (HRL) Q2 2024 Earnings Report

Shares of Hormel Foods Corporation (NYSE: HRL) fell 8% on Thursday after the company reported mixed results for the second quarter of 2024. Earnings beat expectations and revenue missed the mark. The branded food maker has updated its full-year profit forecasts while confirming its sales prospects. Here are the most important conclusions from the report:

Mixed results

For the second quarter of 2024, Hormel reported net sales of $2.89 billion, down 3% from the year-ago period and below estimates of $2.97 billion. GAAP EPS fell 15% to $0.34. Adjusted EPS fell 5% to $0.38, but beat forecasts of $0.36.

Strength in gastronomy

In the second quarter, Hormel saw sales and volumes decline in its Retail and International segments, while its Foodservice segment saw growth in both metrics. Retail sales were impacted by a significant decline in the volume and price of whole turkeys and lower sales of convenience meals and protein, which offset gains from products such as SPAM, Applegate meat and Planters nuts snacks. Retail volumes fell 5% as sales growth in bacon and emerging brands was offset by declines in value-added meat prices.

The company saw both international sales and volume decline 7% during the quarter as double-digit gains in SPAM and refrigerated meat exports were more than offset by lower merchandise export volumes and lower net sales in China.

The Foodservice segment saw sales and volume growth this quarter, driven by strength in categories such as bacon, premium prepared proteins and turkey. Sales increased by 6%, supported by double-digit sales growth in products such as Hormel Baczek 1 cooked bacon, Austin blues cold cuts and Corn nuts corn grains. Volumes in this segment increased by 3% in the second quarter. The company recorded strong development in the grocery channel, led by, among others, Planters AND Corn nuts.

Updated perspective

Hormel updated its fiscal 2024 earnings outlook to reflect its expectations for continued growth in its Foodservice and International segments, supply chain improvements and benefits from strategic initiatives.

The company now expects GAAP EPS to be in the range of $1.45-$1.55, compared to the previous forecast of $1.43-$1.57. Adjusted EPS is now expected to be $1.55-$1.65 compared to the previous range of $1.51-$1.65. Hormel reaffirmed its sales forecasts for this year and expects net sales of $12.2 billion to $12.5 billion, representing 1% to 3% year-over-year growth.