Hormel Foods Corporation

What they do

Hormel develops, processes, and distributes branded and value-added food products, primarily meat, nuts, and other packaged foods. It sells through U.S. retail channels, U.S. foodservice distributors and operators, and international retail and foodservice channels. The company owns brands including Planters, SPAM, Jennie-O, Skippy, Applegate, Wholly, Hormel Black Label, and Fontanini, and holds minority stakes in food companies in the Philippines and Indonesia.

Revenue drivers

• Retail segment — Processes and markets branded food sold through grocery, mass, club, drug, dollar, and e-commerce channels in the U.S., and includes results from the MegaMex Foods joint venture. This is the company's largest segment by sales; net sales declined 4% in the third quarter of fiscal 2026.
• Foodservice segment — Sells food products to distributors and operators including restaurants, hospitality, healthcare, K-12 and college, and convenience stores in the U.S. Net sales rose 2% and segment profit grew in the third quarter of fiscal 2026, with management citing solutions-based offerings and operator partnerships.
• International segment — Runs retail and foodservice operations outside the U.S., including China and Brazil, plus international joint ventures, equity method investments, and royalty arrangements. Net sales declined in the third quarter of fiscal 2026, and profit was significantly impacted by a non-cash impairment of a minority investment in Indonesia.
• Branded product lines — Key product lines include the SPAM family, Jennie-O turkey, Applegate natural and organic meats, Hormel chili, Planters snack nuts, Hormel pepperoni, pizza toppings, and contract manufacturing. Third-quarter growth came from premium prepared proteins, the Jennie-O turkey portfolio, contract manufacturing, and pizza toppings, while commodity turkey, the bacon portfolio, and private label snack nuts declined.

Recent performance

For the third quarter of fiscal 2026 ended July 26, 2026, net sales were $2.96 billion, down 2.4%, with organic net sales down 1.7%. Diluted EPS was $0.11, down 67%, while adjusted diluted EPS was $0.37, up 6%. Operating income was $111 million and adjusted operating income was $266 million, with a $56 million Brazil divestiture loss, a $48 million non-cash impairment charge, and a $38 million litigation settlement weighing on results. Total segment profit fell 17%, but adjusted segment profit was flat as Foodservice growth offset Retail declines. Cash flow from operations was $241 million in the quarter and $769 million for the first nine months, up 47% on improved inventory and working capital.

Strategy

Hormel is executing a multi-year Transform and Modernize initiative and a corporate restructuring plan intended to reduce administrative expenses and improve efficiency. It is simplifying its portfolio, including the third-quarter agreement to sell its Brazil operations under the Ceratti brand, which closed early in the fourth quarter of fiscal 2026, and is focusing international strategy on markets with stronger long-term growth. Capital expenditures in fiscal 2025 were $311 million, including capacity expansions for Hormel Fire Braised and Applegate, data and technology, and the Jiaxing, China facility. Management plans continued marketing and advertising investment behind leading brands and further value-added capacity expansion.

Risks

• Input cost inflation — Fiscal 2025 earnings were significantly pressured by persistent commodity inflation, especially pork belly, beef, and nut input costs.
• Impairment and divestiture charges — The company recorded non-cash impairment charges in the International and Retail segments in fiscal 2025 and a $48 million non-cash impairment of an Indonesia minority investment plus a $56 million Brazil divestiture loss in the third quarter of fiscal 2026.
• Macroeconomic and tariff exposure — Management cites ongoing volatility from macroeconomic and geopolitical conditions, and the 10-K notes that U.S. tariffs and retaliatory actions could raise the cost or reduce the availability of key inputs.
• Consumer demand and trade pressure — Third-quarter net sales declined on weaker commodity turkey, the bacon portfolio, and the strategic exit from select non-core private label snack nuts, with management describing a consumer environment that remains under pressure.

Outlook

For fiscal 2026, Hormel expects net sales of $12.1 billion to $12.2 billion, reflecting organic net sales growth of 1% to 2%, and updated diluted EPS guidance of $1.06 to $1.12. Adjusted operating income guidance was raised to $1.08 billion to $1.12 billion and adjusted diluted EPS to $1.45 to $1.51, each reflecting growth of 6% to 10%. The guidance includes the estimated Brazil divestiture loss, the Indonesia impairment, and the litigation settlement.