Dive Brief:
- Hormel Foods reported record sales of $2.6 billion for the fiscal 2016 fourth quarter, a 9% increase year over year, with volume also rising 9%, according to the company's earnings report Tuesday.
- The company also posted record earnings of $244 million, up 30% from 2015 GAAP net earnings, and record diluted EPS of $0.45, a 29% jump from 2015 GAAP EPS of $0.35 per share.
- Prior to the earnings release, Hormel announced Monday that it would divest Clougherty Packing, LLC, parent company of Farmer John and Saag’s Specialty Meats, and PFFJ, LLC farm operations in California, Arizona, and Wyoming to Smithfield Foods.
Dive Insight:
Hormel has focused on acquisitive growth in recent years, purchasing both Applegate Farms and Justin's. Both acquisitions offered Hormel a stronger presence in fast-growing categories like natural and organic meats and nut butter snacks.
Internal R&D efforts have also inspired industry-leading initiatives like Applegate's removal of GMOs throughout its supply chain, including animal feed. This enabled both Applegate and Hormel to pursue a definition of "natural" meats that may better align with consumers' perception of the term, before the U.S. Food and Drug Administration has released an official definition.
The success of those acquisitions seems to have altered Hormel's trajectory for its portfolio, prompting the divestments. The brands Smithfield is acquiring from Hormel "no longer align with our company’s growth strategies," president and CEO Jim Snee said in a statement.
Hormel's journey to include more better-for-you products in its portfolio has also led to a route less traveled by other major manufacturers: medical foods. Hormel partnered with the Cancer Nutrition Consortium to develop the Vital Cuisine line, nutritional products developed especially for the needs of patients undergoing chemotherapy.