Hormel Foods shares tumble 10% as inflation-wary shoppers keep pulling back

Hormel Foods Corp. shares fell more than 10 percent on Thursday after the maker of Spam, Skippy and Jennie-O reported third-quarter results that beat Wall Street's profit estimate but missed on revenue, prompting the company to trim its full-year sales outlook even as it raised its earnings guidance. The quarterly results, disclosed in a filing with the Securities and Exchange Commission, showed a company still wringing out savings from a multiyear restructuring while its executives said grocery shoppers show little sign of loosening their belts.

The stock closed at $21.28, down roughly 10 percent on the day and near its 52-week low of $19.70, a level last seen when the shares were trading well below their 52-week high of $29.10. Hormel's market capitalization stood at about $13.3 billion after the drop.

A profit beat overshadowed by a sales miss

For the quarter ended July 26, Hormel reported net sales of $2.96 billion, down 2 percent from a year earlier on an organic basis and short of the roughly $3.05 billion analysts had penciled in, according to consensus estimates cited by market data providers. Sales volume fell 7 percent. Operating income was $111 million on a GAAP basis; on an adjusted basis, which strips out one-time charges, operating income was $266 million, a 9.0 percent margin.

Diluted earnings per share came to 11 cents under generally accepted accounting principles. Adjusted diluted earnings per share — the figure Wall Street tracks most closely — was 37 cents, ahead of the 35-cent consensus estimate, according to the company's earnings release posted to its investor relations site.

Results were uneven across the company's three reporting segments. Retail, the largest, posted net sales down 4 percent and organic sales down 3 percent, with segment profit down 4 percent as commodity turkey and private-label snack-nut sales weighed on the business. Foodservice, which sells to restaurants, hospitals and other institutions, notched its 12th consecutive quarter of organic sales growth, with net sales up 2 percent and segment profit up 3 percent. International net sales fell 5 percent, and segment profit dropped sharply because of impairment charges tied to the unit.

Hormel ended the quarter with $840 million in cash, up $169 million from a year earlier, and returned $161 million to shareholders through dividends during the period. The company is a member of the small group of "Dividend Kings" — S&P 500 companies that have raised their payout every year for at least 50 straight years. Its board's most recent increase was its 60th consecutive annual raise, lifting the annualized payout to $1.17 a share.

Consumers still pulling back, executives say

On a call with analysts, Hormel's incoming chief executive, John Ghingo, said the pressure on household budgets that has weighed on the grocery aisle for much of the year has not eased. "The consumer environment right now really is not improving," Ghingo said, according to a transcript of the third-quarter earnings call published by The Motley Fool. "Consumers are still feeling quite strained with low sentiment."

"The consumer environment right now really is not improving. Consumers are still feeling quite strained with low sentiment."

Paul Kuehneman, Hormel's interim chief financial officer, echoed that assessment, telling analysts the company was "not envisioning a meaningful improvement in the upcoming quarters" in consumer spending. Executives also pointed to higher input and freight costs squeezing margins in the turkey business, where unusually warm weather during growout worsened feed-conversion rates on the company's remaining Jennie-O operations this summer.

The revenue shortfall, rather than the earnings beat, dominated the market reaction. Coverage of the stock's slide noted that investors focused on the $2.96 billion top line missing estimates and on management's decision to narrow its full-year sales guidance to a lower range, treating the sales miss as evidence that Hormel's turnaround has yet to translate into consistent volume growth.

A portfolio in transition

The results land in the middle of a broader reshaping of Hormel's business. During the quarter, the company signed a definitive agreement to sell its Brazilian operations, run under the Ceratti brand, a deal that closed early in the fourth quarter as part of what it has described as an effort to simplify its portfolio and concentrate capital on its core North American and branded businesses. That divestiture follows an earlier decision to exit the whole-bird turkey business: in April, Hormel completed the sale of its whole-bird turkey production assets to Life-Science Innovations, a Minnesota company, while retaining the Jennie-O brand for ground turkey, deli meat and other value-added products. The company said at the time it was shedding the "more commodity-oriented" and volatile end of the turkey business to concentrate on higher-margin, branded protein.

The company is also mid-transition at the top. Jeff Ettinger, who previously served as Hormel's chief executive from 2006 to 2016, returned last year as interim CEO to steady the company after the departure of Jim Snee. Hormel's board has since named Ghingo, who has been president since mid-2025, as Ettinger's permanent successor; Ghingo is set to formally become chief executive on October 26, when Ettinger's interim term ends and he moves to a seat on the company's board.

The results also touch the roughly 20,000 people Hormel employs worldwide, including about 1,900 at its flagship processing plant in Austin, Minnesota — the town, nicknamed Spamtown USA, where the company was founded in 1891 and still keeps its headquarters. Consumers encounter the company's roughly three dozen brands, which beyond Spam and Jennie-O include Skippy peanut butter, Planters snack nuts, Applegate natural meats and Justin's nut butters, largely in the center aisles of the supermarket — the retail segment where Hormel's own results showed the sharpest volume softness this quarter.

What comes next

For the fourth quarter, Hormel is now guiding to full-year net sales of $12.1 billion to $12.2 billion, down from a prior range of $12.2 billion to $12.5 billion, implying organic growth of just 1 to 2 percent for the year. At the same time, the company nudged up its adjusted earnings outlook, to $1.45 to $1.51 a share from $1.43 to $1.51, and raised its adjusted operating income guidance to $1.08 billion to $1.12 billion — a signal that cost discipline and the portfolio changes are protecting the bottom line even as top-line growth stalls.

Ettinger told analysts that foodservice, which has now posted 12 straight quarters of organic sales growth, remains the company's strongest lever heading into the final quarter, even as he cautioned that a comparable pickup was unlikely to show up in retail volumes before the fiscal year closes at the end of October. Kuehneman added that softer pork costs could give the company room to reinvest in the business if conditions allow. Investors will get their next full look at the business, and their first quarterly results under Ghingo as chief executive, when Hormel reports fourth-quarter and full-year fiscal 2026 earnings in early December.