- Tyson Foods reported record adjusted earnings per share for the third quarter at $1.21 per share, a 51% increase year over year and $0.15 higher than analysts expected.
- Sales declined 6.7% in the quarter to $9.4 billion from $10.1 billion last year—though that total also beat analysts' estimates.
- Operating income rose 36% to $767 million, including a record 13.9% operating margin for the chicken segment. As a result, Tyson raised its full-year earnings guidance for fiscal 2016.
Though overall quarterly sales declined, Tyson is "a leader in volume sales growth among the top 10 branded food companies" as its products "are growing in sales volume, sales dollars and category share" at retail, according to IRI data, Tyson CEO Donnie Smith said in a statement. Per this quarter's results, total volumes declined 2.7%, but excluding the divestiture of its Mexico chicken operation, Tyson said volumes increased 0.3%.
Tyson has been pursuing a business model that focuses on high-margin categories like value-added chicken and prepared foods. The beef segment, while the least profitable with only a 2.4% operating margin, still brings in the most revenue. And it had the highest volume growth last quarter at 2.9%, versus a 1.9% volume increase for prepared foods and 0.9% decline for chicken.
By focusing on prepared foods and value-added products, Tyson can more easily position itself for growth in the fast-rising e-commerce channel. Last week, Tyson appointed its first vice president of e-commerce to oversee and expand the company's existing e-commerce strategy, which includes partners like Amazon and Alibaba and the meal-kit driven brand Tyson Tastemakers.
Smith said that after posting record earnings this year, the company will focus on generating more growth in fiscal 2017. E-commerce sales and value-added products are likely to play a major role in rejuvenating the company's top-line efforts.
Tyson is also staying aligned with its "protein-centric" rather than meat-centric approach, which positions the company to better capitalize on consumers' demand for protein in general rather than just conventional meat products. That also includes offering more branded products, such as Ball Park, Jimmy Dean and Hillshire Farm, which makes the company less immune to the volatility of commodities.