Hormel Foods (NYSE:HRL) reported third-quarter fiscal 2026 adjusted earnings per share of $0.37, up 6% from the prior-year period, as improved operating margins and cost discipline helped offset a 2% decline in organic net sales.
Interim Chief Executive Officer Jeff Ettinger described the quarter as solid, though not as strong as the second quarter. He said sales were affected by deliberate portfolio actions, softer commodity markets and pressure on consumers, while the company continued to see momentum in strategic portions of its portfolio.
Updated Fiscal 2026 Outlook
The company tightened its full-year organic net sales outlook to growth of 1% to 2%, compared with its prior expectation of 1% to 4%. Hormel now expects fiscal 2026 net sales of $12.1 billion to $12.2 billion.
Hormel raised and narrowed its adjusted earnings-per-share outlook to $1.45 to $1.51, from a previous range of $1.43 to $1.51. The company said the updated adjusted operating income and adjusted EPS outlook represents year-over-year growth of 6% to 10%.
Ettinger said the revised outlook reflects weaker volumes in certain retail franchises and higher freight and fuel costs, partly offset by an improving cost-of-goods environment. The company had previously viewed approximately $0.40 in fourth-quarter adjusted EPS as its outlook; its updated view places $0.40 at the high end and approximately $0.37 at the midpoint.
Lower pork prices began benefiting results during the third quarter, though Interim CFO and Controller Paul Kuehneman said the company expects a larger share of those benefits in future periods as inventory costs work through the business. Beef costs remained elevated compared with the prior year, while logistics costs continued to be a headwind.
Foodservice Growth Continues; Retail Sales Remain Mixed
President and CEO-Elect John Ghingo said Foodservice delivered its 12th consecutive quarter of organic net sales growth despite softer traffic trends across the industry. Premium prepared proteins and branded pepperoni were notable contributors, and Foodservice profit growth outpaced sales growth, producing another quarter of margin expansion.
Retail results were more uneven. The divestiture of Hormel’s whole-bird turkey business, the exit from certain private-label snack nut products, pricing elasticity and a challenging consumer environment weighed on sales and volumes. Ghingo said about half of the Retail segment’s volume decline was related to the whole-bird turkey business, private-label snack nut exits and contract manufacturing.
Nevertheless, the company cited growth in several priority brands and product lines, including JENNIE-O Ground Turkey, Applegate, Hormel Chili, refrigerated entrees and Planters. Ghingo said JENNIE-O Ground Turkey and Hormel Square Table entrees posted mid- to high-single-digit consumption growth. He also cited consumption growth for Applegate, the company’s center-store canned portfolio, Herdez, Hormel Black Label Bacon and Planters.
Hormel is shifting more marketing spending toward retailer media and digital channels, an effort it expects to continue through the fourth quarter. The company said it plans increased advertising spending in the fourth quarter following lower advertising expense in the third quarter due partly to timing.
International Actions and Supply Chain Costs
Hormel announced a definitive agreement to sell its Brazil operations, which closed early in the fourth quarter. Kuehneman said the company recognized a loss related to the sale at the corporate level during the third quarter. Brazil’s operating results will be excluded from organic volume and net sales comparisons going forward.
The International segment was also affected by an impairment tied to a minority investment in Indonesia and a one-time legal-entity transition that delayed recognition of certain SPAM export sales. Kuehneman said the majority of the segment’s tonnage decline was associated with the legal-entity change.
Management said underlying demand for branded export products remained resilient and expressed confidence in the segment’s outlook. Hormel is focusing its international strategy more heavily on the Asia-Pacific region and has relocated Group Vice President of International Swen Neufeldt to Singapore.
In the supply chain, Hormel incurred incremental costs from inventory rebalancing, lower production volumes and operating challenges. Ghingo said higher temperatures and weaker feed conversion affected the turkey supply chain, while severe weather-related power outages at several facilities created additional costs. Management characterized those issues as short-term in nature.
Cash Flow, Capital Allocation and Leadership Changes
Hormel generated $241 million in operating cash flow during the quarter, up 54% from a year earlier, primarily due to improved inventory management and working capital performance. Capital expenditures totaled $68 million, while the company returned $161 million to shareholders through dividends.
Cash on hand was $840 million at quarter-end, up $169 million from the end of fiscal 2025. Hormel said it had reached its 392nd consecutive quarterly dividend payment and remained committed to its dividend. Ghingo said the company also remains open to strategic partnerships and acquisitions.
Ettinger said this was his final earnings call as interim CEO, though he will remain a member of Hormel’s board. Ghingo will become the company’s next CEO, and Hormel also announced that Ash Bhumbla will join as its next CFO. Ghingo said the company is focused on simplifying operations, investing behind priority brands and growth platforms, and improving execution as it prepares for fiscal 2027.
About Hormel Foods (NYSE:HRL)
Hormel Foods Corporation is a global branded foods company primarily engaged in the production, marketing and distribution of value-added, high-quality meat and food products. The company’s portfolio spans a range of categories including refrigerated and frozen meats, pantry staples, specialty foods and shelf-stable items. Through manufacturing facilities located across North America and international markets, Hormel Foods supplies retail grocers, foodservice operators, convenience stores and e-commerce platforms.
Among its best-known brands, Hormel Foods produces SPAM® canned meats, Jennie-O® turkey products, Skippy® peanut butter and Applegate® natural and organic meats.
