Key Highlights
- Fiscal 2026 net sales guidance reduced to $12.1B-$12.2B from previous range of $12.2B-$12.5B
- Third-quarter revenue declined 2.4% year-over-year to $2.96B, below the $3.04B consensus
- Retail division sales declined 4%, with volume falling 9% in the period
- Weakness in commodity turkey pricing and private-label snack nuts pressured results
- Shares of HRL dropped 9.1% to close at $21.57 on Thursday’s trading session
Shares of Hormel Foods (HRL) tumbled 9.1% to $21.57 on Thursday following the packaged food company’s decision to lower its annual sales outlook alongside a disappointing third-quarter revenue performance.
The Minnesota-based company revised its fiscal 2026 net sales projection to a range of $12.1 billion to $12.2 billion. This represents a reduction from the previously announced guidance of $12.2 billion to $12.5 billion.
Third-quarter revenue totaled $2.96 billion, representing a 2.4% decrease compared to the same period last year and falling short of Wall Street’s consensus estimate of $3.04 billion. On a positive note, adjusted earnings per share reached 37 cents, surpassing analyst expectations of 35 cents.
Incoming CEO John Ghingo attributed the underwhelming performance to strategic portfolio adjustments, declining commodity prices, and persistent challenges in the consumer market.
“The results reflected the impacts of portfolio-shaping actions, lower commodity-based pricing in portions of the business and a consumer environment that remains under pressure,” Ghingo said.
Retail Division Weighs on Performance
Hormel’s retail segment, which represents the company’s largest revenue contributor, experienced a 4% sales decline while volumes plummeted 9% during the three-month period. The deterioration was primarily driven by softer commodity turkey pricing and weakness in private-label snack nut sales.
Demand across the packaged food industry continues to face headwinds. Elevated costs of living have constrained consumer spending, creating challenges that Hormel has been unable to escape.
The company finalized the divestiture of its CERATTI business in Brazil during the quarter, part of a strategic effort to concentrate resources on markets with stronger growth potential.
Updated Outlook and Wall Street Response
Despite the revenue challenges, Hormel increased its full-year adjusted EPS guidance to $1.45-$1.51, up from the previous range of $1.43-$1.51. This modest upward revision provides one of the few optimistic elements in an otherwise subdued forecast update.
The company also tightened its organic sales growth outlook to 1%-2%, down from the earlier projection of 1%-4%. The narrowed range signals limited upside potential in the near term.
Analysts at Oppenheimer characterized the quarterly results as a mixed picture. While they anticipate continued pressure on the stock price, they noted they would monitor whether Hormel can achieve its long-term objectives of 2%-3% net sales growth and 5%-7% operating profit expansion.
In recent leadership moves, Hormel announced earlier this week that Ash Bhumbla, a former Tyson Foods executive, would join as Chief Financial Officer in September. Ghingo assumed the CEO position last month.
HRL shares ended Thursday’s session at $21.57, down 9.1% for the day.
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