Hormel Foods Corporation Q1 2026 Earnings Call Summary Moby Intelligence Fri, February 27, 2026 at 5:33 AM GMT+8 3 min read In this article: - HRL +3.14%
Hormel Foods Corporation Q1 2026 Earnings Call Summary - Moby Strategic Performance Drivers and Portfolio Optimization
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Achieved a fifth consecutive quarter of organic net sales growth, led by high single-digit gains in Foodservice and International segments.
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Announced the divestiture of the whole-bird turkey business to reduce exposure to volatile, low-margin commodity markets and sharpen focus on value-added Jennie-O products.
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Implemented a second wave of retail pricing at the start of Q2 to offset persistent inflationary pressures in beef, pork trim, and nuts.
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Attributed Foodservice outperformance to a solutions-based portfolio that addresses operator labor challenges and high-quality protein demand.
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Progressed the 'Transform and Modernize' initiative, moving beyond foundational phases to drive efficiency and capacity across core manufacturing lines.
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Acknowledged Retail segment challenges driven by a strategic exit from non-core private label snack nuts and unexpected logistics headwinds.
Fiscal 2026 Outlook and Operational Assumptions
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Reaffirmed full-year organic net sales growth of 1% to 4% and adjusted diluted EPS guidance of $1.43 to $1.51.
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Expects Q2 adjusted EPS to be flat to slightly up, benefiting from a full quarter of restructuring savings and implemented retail pricing.
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Assumes commodity costs will ease in the second half of the year, though beef is expected to remain a headwind throughout fiscal 2026.
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Projects the whole-bird turkey divestiture will reduce fiscal 2026 net sales by approximately $50 million, with the primary financial impact occurring in 2027.
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Anticipates continued upward pressure on transportation costs due to refrigerated sector tightening and driver availability issues.
Structural Changes and Risk Factors
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The whole-bird turkey sale includes the Melrose facility and associated hen assets, while Hormel retains the Jennie-O brand and all value-added tom turkey operations.
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Logistics expenses rose unexpectedly in late Q1 due to severe winter weather and industry-wide carrier exits, impacting retail profitability.
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Finalized a new strategic partnership for the Justin's brand to better align the business with a supportive ownership model.
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Appointed new leadership in Retail Sales and Enterprise Marketing to integrate external capabilities with institutional protein knowledge.
Q&A Session Insights
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Drivers of sequential profit improvement in the second half-
Management cited a combination of pricing benefits, 'Transform and Modernize' productivity, and the absence of one-time discrete events that hampered the prior year's Q4.
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The company expects modest improvements in most commodity markets, excluding beef, to support margin expansion in the back half.
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The whole-bird business typically generates $200 million to $275 million in annual sales but is described as significantly dilutive to retail margins.
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Divesting the hen complex allows the team to focus resources on high-growth areas like ground turkey, which saw 15% dollar consumption growth.
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Volume declines were driven by the exit from private label nuts, pricing-related elasticity, and specific softness in the SKIPPY brand.
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Management remains confident in the retail outlook, noting that priority brands grew dollar consumption by 3% despite the broader volume headwinds.
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