Hormel Foods Reports Decline in Net Sales and Profitability for Q1 Fiscal 2025

Hormel Foods Corporation reported its financial results for the first quarter of fiscal 2025, revealing a slight decline in net sales and profitability compared to the previous year. The company generated net sales of $2.99 billion, a decrease of 0.3% from $2.997 billion in the same quarter of fiscal 2024. Net earnings attributable to Hormel Foods Corporation were $170.6 million, down 22.1% from $218.9 million a year earlier, resulting in diluted earnings per share of $0.31, a decrease of 22.5% from $0.40.

The decline in financial performance was attributed to several factors, including increased costs of products sold, which rose by 1% to $2.51 billion, primarily due to higher commodity input costs. Gross profit also fell by 6.6% to $475.2 million, reflecting a decrease in gross profit margin from 17% to 15.9%. The company noted that while the Foodservice segment experienced organic growth, this was offset by lower sales in the Retail and International segments, leading to a 13% decrease in total segment profit.

Strategically, Hormel Foods undertook significant organizational changes, including the divestiture of non-core operations. In October 2024, the company sold its equity interests in Hormel Health Labs for $24.5 million and a non-core sow operation for $13.6 million, resulting in a pre-tax gain and loss, respectively. The company also continued to invest in its Transform and Modernize initiative, aimed at enhancing operational efficiencies and customer service, which incurred expenses impacting the quarter's profitability.

Operationally, Hormel Foods reported a decrease in volume, with total pounds sold dropping by 4.2% to 1.06 billion. The Retail segment saw a decline in volume and net sales, while the Foodservice segment reported a slight increase in organic sales driven by strong performance in premium protein categories. The International segment faced challenges, with net sales declining due to softness in Brazil, despite growth in China. The company’s employee headcount remained stable, and it continues to focus on maintaining its market share across its product lines.

Looking ahead, Hormel Foods anticipates a challenging environment, with expectations for net sales growth in the second quarter of fiscal 2025 across all segments. The company aims to navigate rising costs and market pressures while leveraging its strategic initiatives to enhance profitability. The effective tax rate for the quarter was reported at 21.8%, down from 23.4% in the previous year, reflecting benefits from federal transferable energy tax credits. Hormel Foods remains committed to its dividend policy, having increased its annual dividend rate for fiscal 2025, marking the 59th consecutive annual increase.