Hormel Foods continued to benefit from the increased eating and grocery shopping of people who are working at home this winter, and executives raised their outlook for financial results heading into spring even as the year-ago comparisons will get tougher.
Executives said that the easing of the coronavirus pandemic is visible in its orders and shipments to restaurants and other food service businesses. And efficiencies that the company developed during the crisis should continue to pay off even if the outsized demand seen at grocery stores begins to ease, they said.
“I am increasingly optimistic about generating sales and earnings growth in fiscal 2021,” Jim Snee, the company’s chief executive, said in a statement that accompany its fiscal first quarter results this morning.
Hormel said it earned $222.3 million in the three months ended Jan. 24, down 8.4% from a year ago due chiefly to higher product costs and higher taxes. The profit amounted to 41 cents a share, in line with analysts’ estimates. Sales rose 3.2% to $2.46 billion.
Hormel shares were up slightly in pre-market trading indications.
In raising Hormel’s sales and profit guidance, Snee cited the return of higher sales to food service customers, recovery of China and other international markets and the lessons the company has learned in other segments over the past year. That optimism doesn’t include the effect of the Planters nut business, which Hormel said last week it would acquire from Kraft Heinz in its biggest deal ever.
“Our retail and deli teams have momentum going into the second quarter even as some of our retail businesses, especially grocery products, have very difficult comparisons due the extremely high levels of demand we experienced last year,” Snee said.
The company now expects its full-year profit to be in a range of $1.70 to $1.82 a share, which has a midrange above the existing analysts’ consensus of $1.73 a share. Hormel earned $1.66 a share in its last fiscal year.
For the just-finished first quarter, Snee said all the company’s major product brands, including Hormel Black Label, Spam, Jennie-O and Skippy, produced “exceptional” growth.
The company’s largest business segment, meats and other products that require refrigeration, saw a 1% gain in revenue but a 16% drop in profit. But the grocery products business, which includes products like Spam and Skippy that sit on shelves in the center of the store and last longer at home, had a 7% gain in revenue and 35% jump in profit.
Evan Ramstad • 612-673-4241