Hormel Foods (HRL) lowered its fiscal 2026 sales outlook on Thursday as it reported mixed third-quarter results, with the top line pressured amid a challenging consumer environment.
The owner of the Planters snack nuts brand now projects full-year sales of $12.1 billion to $12.2 billion, compared with $12.2 billion to $12.5 billion previously. The revised guidance falls short of the FactSet-polled consensus of $12.22 billion. The company tightened its organic net sales growth forecast to 1% to 2%, from 1% to 4%.
Hormel narrowed and raised its guidance range for full-year adjusted per-share earnings to $1.45 to $1.51, from $1.43 to $1.51. But that's also lower at the midpoint compared with Wall Street's $1.50 estimate.
For the third quarter ended July 26, net sales declined 2.3% year over year to $2.96 billion, while analysts expected a flat top line. Organic net sales fell 2%. Adjusted EPS rose to $0.37 from $0.35 a year earlier, exceeding the consensus of $0.35.
"While there were several moving pieces during the quarter, we remained focused on disciplined execution and delivered adjusted earnings growth," John Ghingo, who will take over as Hormel chief executive starting Oct. 26, said during an earnings conference call, according to a FactSet transcript. "Net sales declined modestly, reflecting portfolio shaping actions, softer commodity markets and a challenged consumer environment."
The company's shares were down 8.8% in Thursday morning trade. The stock is down more than 8% this year so far.
"Lower volumes and some operational inefficiencies negatively impacted margin improvement for the quarter but we believe that we remain on track for improving margins over time," interim Chief Financial Officer Paul Kuehneman told analysts. "On cost of goods sold, over the long-term, lower commodity prices (should) help our margin profile. On a short-term basis, however, the benefits of lower input costs can take some time to be realized as we work through our inventory positions."
Hormel has announced the apppointment of Ash Bhumbla as its next CFO, effective Sept. 8.
Third-quarter revenue from the retail segment declined 4.3% to $1.78 billion as volume fell 9%, with declines in commodity turkey and private label snack nuts partially offset by gains in value-added turkey offerings, contract manufacturing and Planters snack nuts. Foodservice sales increased 1.6% to $1 billion.
Earlier this month, Tyson Foods (TSN), which is Hormel's competitor in the meat and poultry business, reported mixed fiscal third-quarter results, with profit coming in stronger than expected despite a surprise decline in revenue.
Also reporting earlier this month, packaged food company Kraft Heinz (KHC) narrowed its full-year EPS outlook after posting better-than-expected fiscal second-quarter results.
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