Hormel Foods-HRL's Q4 Earnings Miss, Sales Decline on Weak Retail Business

Core Insights - Hormel Foods Corporation reported its fourth-quarter fiscal 2024 results, with net sales matching the Zacks Consensus Estimate but declining year-over-year. The bottom line remained flat compared to the previous year but missed consensus expectations [1][2]. Financial Performance - Adjusted earnings were 42 cents per share, missing the Zacks Consensus Estimate of 43 cents [2]. - Net sales totaled $3,138.1 million, down from$ 3,198.1 million in the year-ago quarter, reflecting a volume decline of 4.1% [3]. - Gross profit increased to $521.2 million from$ 514.4 million year-over-year, while SG&A expenses rose to $238.6 million from$ 216.5 million [4]. - Adjusted operating income decreased to $308 million from$ 313.1 million, with the adjusted operating margin remaining stable at 9.8% [4]. Segment Performance - Retail unit net sales fell 3.8% year-over-year to $1,907.1 million, with volumes down 6%. Despite declines in several categories, growth in branded products partially offset the decrease [5]. - Foodservice segment net sales increased by 1.3% to$ 1,046 million, with volumes up 2%. However, segment profit decreased by 8% due to reduced margins and increased SG&A expenses [6]. - International unit net sales rose 1.4% to $185 million, despite a 10% drop in volumes. The increase was driven by demand in China and strong exports, although turkey export volumes declined [7]. Financial Health - The company ended the quarter with cash and cash equivalents of$ 741.9 million and total long-term debt of $2,850.9 million. Cash flow from operations was$ 408.6 million [8]. Shareholder Returns - Hormel Foods announced a 3% dividend increase, raising the annual rate to $1.16 per share, marking the 59th consecutive year of annual dividend growth [9]. Strategic Initiatives - The company made significant progress with its Transform and Modernize (T&M) initiative, generating$ 75 million in operating income benefits, with expectations of an additional $100 million to$ 150 million in fiscal 2025 [10]. - Hormel Foods aims for at least $250 million in annualized operating income growth by fiscal 2026 through this initiative [10]. Fiscal 2025 Outlook - For fiscal 2025, Hormel Foods expects net sales between$ 11.9 billion and $12.2 billion, with organic growth projected at 1% to 3% [11]. - Operating income is anticipated to be between$ 1.13 billion and $1.23 billion, with adjusted operating income expected in the range of$ 1.18 billion to $1.28 billion [12]. - The company forecasts annual EPS between$ 1.51 and $1.65, with adjusted EPS projected to range from$ 1.58 to $1.72 [12]. Market Performance - Hormel Foods' stock has decreased by 0.9% over the past three months, contrasting with the industry's growth of 1.5% [15].