Shares in Hormel Foods Corporation (NYSE: HRL) declined by 1% on Monday, marking a 6% decrease over the last month. The branded food company has encountered some short-term difficulties with sales and volume reductions, but is actively pursuing growth through multiple strategic initiatives.
Growth Strategies
In fiscal year 2024, Hormel navigated a fluctuating consumer landscape. In response, the company continued to reinvest in its brands, broaden its market reach, and launch innovative products throughout its range.
In the Retail segment, Hormel concentrated its efforts on brands and categories projected to yield the highest returns. The company experienced substantial growth in brands such as Hormel Black Label, Jennie-O, SPAM, and Applegate, benefiting from notable innovations and increased marketing expenditures.
Hormel also recorded positive momentum in its Foodservice segment, which saw a net sales increase of 6%. This growth was bolstered by the convenience channel, helped by the expansion of entertaining and snacking brands, including Columbus and Gatherings.
In the fourth quarter of 2024, the Foodservice segment contributed to volume and sales growth, largely fueled by strong performance in premium prepared proteins, salty snacks, turkey, bacon, and pizza toppings. Key products like Heritage Premium Meats, Hormel Fire Braised meats, Jennie-O turkey, Planters snack nuts, and Cafe H global proteins drove top-line growth during this period.
In the International segment, Hormel boosted branded exports for SPAM products and Skippy peanut butter. Investments in the Philippines and Indonesia helped stimulate growth, while there was a business recovery noted in China.
Future Outlook
For fiscal year 2025, Hormel projects net sales between $11.9 billion and $12.2 billion, anticipating organic sales growth of 1% to 3%. GAAP earnings per share are expected to be in the range of $1.51 to $1.65, with adjusted EPS forecasted at $1.58 to $1.72.
The company anticipates that all segments will contribute to top-line growth in FY2025 as it rolls out innovative products and enhances brand investments. In the Retail segment, Hormel expects to see comparable volume and low-single-digit net sales growth, while the Foodservice segment is projected to experience mid-single-digit increases in both volume and net sales, adjusted for the Hormel Health Labs divestiture. For the International segment, Hormel anticipates low-single-digit increases in volume and high-single-digit rises in net sales.
