Dive Brief:
- Hormel reported record third-quarter earnings Thursday, including a 5% increase in sales to $2.3 billion, a new high for the company.
- Hormel also saw its net earnings soar 33% to a record $195.7 million for the quarter, marking the 13th consecutive quarter of record earnings, Hormel chairman and CEO Jeffrey M. Ettinger said in a statement.
- The company raised its full-year profit outlook for the third time this year, now expected to reach $1.60 to $1.64 a share, up from the prior estimate of $1.56 to $1.60.
Dive Insight:
Hormel continues to deliver growth for shareholders. Over the past decade, the company has increased revenue from $5.4 billion to $9.3 billion, more than doubled earnings, nearly quadrupled dividends, produced about a 400% return on its stock price and increased its Fortune 500 ranking by almost 100 spots, to No. 304 this year.
Three of Hormel's five segments posted growth in volume, sales and earnings in the quarter, which stands out from several competitors' recent earnings reports.
Jennie-O Turkey Store posted the largest segment numbers as the brand continues to bounce back from the dive it took during and following last year's bird flu outbreak. The segment reported a 59% increase in operating profit, 29% increase in volume and 20% increase in dollar sales. As the holidays draw nearer, the combination of holiday-related turkey sales and the bird flu rebound could keep these numbers strong in coming quarters.
The next largest growth numbers came from the refrigerated foods segment, which includes Hormel's 2015 acquisition of Applegate Farms. This segment boosted its operating profit by 24%, volume by 3% and dollar sales by 9%. Applegate has proven to be a strong growth channel for Hormel, especially as the brand continues to lead industrywide initiatives like removing GMOs throughout its entire supply chain.
The grocery products segment reported flat operating profit, but volume was up 1% and dollar sales up 3%. Growth here came from both legacy brands, like Spam and Skippy, but also new additions like Justin's, the nut butter-based snack maker Hormel acquired earlier this year.
Specialty foods was a notable exception to the otherwise growth-centric earnings report. The segment's operating profit was down 13% as volume dropped 32% and dollar sales fell 25%. However, those declines primarily reflected the impact of Hormel's divestment of the Diamond Crystal Brands business, the company said in a statement.