Despite selling less food than it did a year before, higher prices helped Hormel's profit soar 24% this summer.
But the Austin, Minn.-based company missed Wall Street expectations for the quarter and lowered its yearly profit forecast on Thursday. Its stock sank more than 6.5% on the news.
Hormel Foods on Thursday posted a nearly $219 million profit in its fiscal third quarter, which ended July 31. That equates to $0.40 per share, slightly lower than the analysts' forecast.
The maker of Spam, Planters and Black Label bacon lowered its profit outlook from a range of $1.87-$1.97 to $1.78-$1.85 per diluted share.
Revenue for the quarter crested $3 billion — a 6% rise from the same period a year ago — which chief executive Jim Snee called another record.
"We overcame significant challenges, including continued broad-based inflationary pressures, persistent upstream and downstream supply chain disruptions, limited turkey supply, and impacts in China from COVID related restrictions and temporary plant shutdowns," Snee said in a statement.
Yet the company sold about 100,000 fewer pounds of food in the third quarter compared to last year, an 11% drop.
Like all food companies, Hormel has raised prices to offset higher costs it is paying for raw materials, shipping and labor.
Snee said the company's brands are "responding well to pricing actions" and that cost pressures should ease over the next six months.
"With the relief that we've recently seen from some of the key inputs, we don't believe that additional [price increases are] going to be necessary," Snee told investors Thursday.
Skippy peanut butter benefited from a spring recall of market-leading Jif, helping boost volumes and sales for the company's grocery products segment.
Jennie-O Turkey Store, refrigerated foods and international business all saw volumes drop and sales fall or flatten.
The bird flu cases found in Meeker County this week are part of the Jennie-O supply chain, Hormel chief financial officer Jacinth Smiley told investors Thursday. The outbreak will lower production volumes through the end of the year, she said.
Hormel announced last month it would be reorganizing its business segments as of the start of the next fiscal year in November, which Snee brought up again Thursday as a way to "better align our business to the needs of our customers, consumers and operators, and drive sustainable long-term growth."
The company's stock closed Thursday at $46.98, a two-month low.
