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. These brands benefited from product innovation and higher marketing investments.
Hormel maintained its momentum in the Foodservice segment during the year, with net sales growth of 6%. This segment benefited from growth in the convenience channel, driven by the expansion in distribution of entertaining and snacking brands like Columbus and Gatherings.
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.
Within the International segment, Hormel 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 witnessed a recovery 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.
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