Hormel Foods Cuts Annual Sales Outlook After Q3 Revenue Miss and Three One-Time Charges

Hormel Foods reported fiscal third-quarter results on August 27, beating adjusted earnings estimates but falling short on revenue and slashing its full-year sales forecast. The company posted non-GAAP EPS of $0.37, beating estimates by $0.02, but net sales of $2.96 billion missed the $3.03 billion consensus by roughly $80 million. Net income collapsed 67.6% year over year to $59.6 million, while operating income fell 53.7% to $110.9 million, weighed down by three discrete pre-tax charges: a $56 million loss on the divestiture of its Brazil business, a $48 million impairment in Indonesia, and a $38 million litigation settlement.

Operating expenses rose 25% year over year to $323.5 million. Hormel cut its full-year net sales guidance to a range of $12.1 billion to $12.2 billion, down from a prior range of $12.2 billion to $12.5 billion, citing sluggish consumer demand, lower commodity prices for turkey and nuts, and persistent food inflation. Despite the revenue cut, the company raised its adjusted operating income outlook to $1.08 billion to $1.12 billion, reflecting growth of 6% to 10%, and updated its GAAP diluted EPS range to $1.06 to $1.12.

By segment, retail sales fell 4.3% year over year to $1.78 billion and international dropped 4.7% to $0.18 billion, while foodservice rose 1.6% to $1.00 billion, marking its 12th consecutive quarter of organic net sales growth. Operating cash flow surged 53.5% to $240.6 million. The stock fell roughly 1.2% in premarket trading following the report.