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Improving foodservice demand boosts Hormel Q2 2021 sales, earnings

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May 20, 2021

Sales increased for Hormel Foods Corp. in Q2 2021 due to a recovery in foodservice and higher whole bird shipments, according to a press release. Retail sales declined but remain elevated compared to pre-pandemic levels.

Sales rose 7.6% from $2.42 billion in Q2 2020 to $2.6 billion in the quarter ending April 26, 2021.

Net earnings rose from $227.6 million to $227.9 million. Earnings per share remained flat at 42 cents on both a basic and diluted basis.

Sales for grocery products fell 8.1% from $683.2 million to $628.2 million, while refrigerated food sales rose 16.5% from $1.25 billion to $1.45 billion, Jennie-O Turkey store rose 2.4% from $343 million to $351.2 million and international and "other" rose 16.8% from $148.8 million to $173.8 million.

Nearly every foodservice category experienced growth, led by pizza toppings and brands such as Fontanini and Hormel Bacon. Retail and deli growth was driven by numerous brands, including Hormel Black Label, Hormel Gatherings, Sadlers and Applegate. The improvement in segment profit was driven by foodservice growth, increased retail fresh pork profits and lower operational costs.

The $261 billion in revenue beat analyst expectations by $200 million, while the GAAP EPS of 42 cents beat expectations by one cent, according to Seeking Alpha.

Shares traded at $49.42 today against a 52-week range of $43.22-$52.17.

"We were able to achieve these record results through strong foodservice sales, continued elevated demand in the retail, deli and international channels, and improved supply chain performance," Jim Snee, chairman of the board, president and chief executive officer, said in the press release.

"We anticipated rapid demand changes in our foodservice business, and our team delivered, with sales exceeding 2019 pre-pandemic levels," Snee said. "We have a very positive outlook on the foodservice industry and continue to see elevated demand in the retail, deli and international channels."

The company expects sales to reach $10.2-$10.8 billion in 2021 while diluted EPS to reach $1.70-$1.82, not including the estimated impact from the pending acquisition of Planters.