Shares of Hormel Foods Corporation (NYSE: HRL) fell 1% on Monday. The stock has dropped 6% over the past month. The branded food company has faced some near-term challenges with regards to declines in sales and volumes but it has been working on driving growth through the implementation of several strategies and initiatives.
Growth initiatives
During fiscal year 2024, Hormel faced a dynamic macro consumer environment. Against this backdrop, the company continued to reinvest in its brands, expand its market presence, and introduce innovative products across its portfolio.
Within the Retail segment, Hormel continued to focus its resources on brands and categories which are expected to generate maximum yields. The company witnessed strong growth for brands such as Hormel Black Label, Jennie-O, SPAM, and Applegate, along with household expansion across on-trend categories. This growth was driven by product innovation as well as higher investments in marketing.
Hormel maintained its momentum in the Foodservice segment during the year, with net sales growth of 6%. Product innovation played a meaningful role in driving growth within this segment as well. In addition, the company’s efforts in expanding the distribution of its entertaining and snacking brands like Columbus and Gatherings helped fuel solid growth in the convenience channel.
During the fourth quarter of 2024, the Foodservice segment saw volume and sales growth driven by strong performance across the premium prepared proteins, salty snacks, turkey, bacon, and pizza toppings categories. Products such as Heritage Premium Meats offerings, Hormel Fire Braised meats, Jennie-O turkey, Planters snack nuts, and Cafe H global proteins delivered top line growth during the period.
Hormel witnessed strong recovery within its International segment. The company increased branded exports for the SPAM family of products and Skippy peanut butter. Its investments in the Philippines and Indonesia helped drive growth and it saw a pickup in its business in China.
Outlook
For fiscal year 2025, Hormel expects net sales to range between $11.9-12.2 billion. Organic sales growth is expected to be 1-3%. GAAP earnings per share is expected to be $1.51-1.65 while adjusted EPS is expected to be $1.58-1.72.
The company expects each of its segments to deliver top line growth in FY2025 as it continues to roll out innovative offerings and increase investments in its brands. Hormel expects comparable volume and low-single-digit increases in net sales for the Retail segment. In Foodservice, it expects mid-single-digit increases in both volume and net sales, after adjusting for the Hormel Health Labs divestiture. For the International segment, the company expects low single-digit increases in volume and high single-digit increases in net sales.