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HORMEL FOODS CORP /DE/

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Business Summary

Hormel Foods Corporation is a global branded food company operating in the highly competitive meat and food products industry, with a portfolio that includes meat, nuts, and other food products sold across U.S. retail, U.S. foodservice, and international channels. The company competes with manufacturers of pork and turkey products as well as national and regional producers of other meat and protein sources such as beef, chicken, fish, nuts, and plant-based proteins, competing on the basis of price, product quality and attributes, brand identification, breadth of product line, and customer service.

The company's primary competitors include manufacturers of pork and turkey products as well as national and regional producers of other meat and protein sources. The company's strategy to maintain its competitive position focuses on meeting customer and consumer preferences, delivering product innovation, and maintaining long-term and lasting relationships with industry partners, supported by a dedicated network of direct and indirect sales personnel and robust quality assurance programs.

The company generates revenue through the processing, marketing, and sale of branded, value-added food products across three reportable segments: Retail, Foodservice, and International. Revenue is recognized at the point in time when control of the product has transferred to the customer, typically upon receipt or pickup, and the company's payment terms generally range between seven to 60 days. The company's largest customer, Walmart Inc. and its subsidiaries, accounted for 15.6 percent of consolidated gross sales less returns and allowances during fiscal 2025, and the top five customers collectively represented approximately 38 percent of consolidated gross sales less returns and allowances during the same period.

The Retail segment consists primarily of the processing, marketing, and sale of food products sold predominantly in retail channels including grocery stores, mass merchandisers, club stores, natural food chains, drug, dollar and discount chains, and e-commerce providers in the United States, and also includes the results from the MegaMex Foods, LLC joint venture. For fiscal 2025, the Retail segment reported net sales of $7,455,218 thousand and segment profit of $425,245 thousand , with adjusted segment profit of $495,995 thousand . The Foodservice segment consists primarily of the processing, marketing, and sale of food products to distributors and operators across a wide range of providers of food away from home, including restaurants, hospitality, healthcare, K-12, college and universities, and convenience stores in the U.S., reporting net sales of $3,941,795 thousand and segment profit of $554,574 thousand for fiscal 2025.

The International segment processes, markets, and sells the company's products through retail and foodservice channels internationally, including results from international joint ventures, equity method investments, and royalty arrangements, as well as operations in China and Brazil. For fiscal 2025, the International segment reported net sales of $709,146 thousand and a segment loss of $(80,418) thousand , with adjusted segment profit of $83,293 thousand . The company's products primarily consist of meat, nuts, and other food products, with key brands including Planters, SPAM, Jennie-O, Skippy, Applegate, Wholly, Hormel Black Label, Fontanini, Bacon1, and Hormel pepperoni, among more than 30 other brands.

During fiscal 2025, the company recognized a $163.7 million impairment charge related to its minority investment in PT Garudafood Putra Putri Jaya Tbk (Garudafood) in the International segment, and $70.8 million of intangible asset impairments in the Retail segment, including $59.1 million for the Planters trade name, $2.9 million for the Chi-Chi's trade name, and $8.8 million for a private label customer relationship. The company also commenced a corporate restructuring plan in the fourth quarter of fiscal 2025, sold its equity interests in Mountain Prairie, LLC for $13.6 million resulting in a pre-tax loss of $11.3 million , and entered into a definitive agreement to sell a 51% controlling position in the Justin's business. Dividends paid to shareholders were a record $633 million , and capital expenditures were $311 million .

For fiscal 2025, net sales totaled $12,106,160 thousand , an increase of 1.6 percent compared to $11,920,797 thousand in fiscal 2024. Net earnings attributable to Hormel Foods Corporation were $478,197 thousand , a decrease of 40.6 percent from $805,038 thousand in the prior year. Diluted earnings per share were $0.87 compared to $1.47 in fiscal 2024, and adjusted diluted earnings per share were $1.37 compared to $1.58 in the prior year. Operating income decreased 33 percent to $718,603 thousand from $1,067,932 thousand in fiscal 2024.

Business Outlook

For fiscal 2026, the company expects organic net sales growth of 1 percent to 4 percent , diluted earnings per share in the range of $1.29 to $1.39 , and adjusted diluted earnings per share in the range of $1.43 to $1.51 . The company anticipates segment profit growth from all three segments in fiscal 2026, with earnings expected to decline in the first quarter followed by growth in each of the remaining three quarters. The effective tax rate for fiscal 2026 is expected to be between 21.5 and 22.5 percent .

The company's growth strategy is centered on its multi-year Transform and Modernize (T&M) initiative, which began in the second half of fiscal 2023 with a goal of contributing meaningful operating profit growth through fiscal 2026. The company expects the T&M initiative to continue delivering cost savings in fiscal 2026, with a focus on procurement of ingredients and supplies, production-related costs, and logistics. Net sales growth in fiscal 2026 is expected to be driven by growth across a broad range of categories, increased brand support and innovation, market-based pricing actions, and the company's current assumptions for raw material costs.

The company's International segment growth is expected to be driven by year-over-year growth for volume, net sales, and segment profit, with risks including macroeconomic conditions in multinational markets, cost inflation, and global trade dynamics. The Foodservice segment anticipates year-over-year growth for volume, net sales, and segment profit, with risks including a softening of foodservice industry demand, lower-than-expected raw material markets which through market-based pricing can negatively impact net sales, and higher-than-expected operating costs. The Retail segment expects modest net sales growth from a broad range of categories, higher brand support, and market-based pricing actions, with segment profit expected to grow compared to the prior year.

The company expects gross profit as a percent of net sales to increase in fiscal 2026 compared to the prior year, with incremental cost inflation and unfavorable sales mix posing the largest risks to this outlook. Raw material costs for beef and nuts are expected to remain above historical averages, while pork costs are anticipated to be lower than fiscal 2025 levels but remain elevated compared to long-term averages. Inflationary pressures on employee-related, packaging, and production expenses are expected to persist at normalized levels. The company intends to continue investing in its leading brands, with full year advertising expense expected to increase compared to the prior year.

Capital expenditures for fiscal 2026 are estimated to be $260 million to $290 million , with a focus on projects related to infrastructure, new data and technology, and equipment upgrades. The implied annualized dividend rate for 2026 is $1.17 per share , representing an increase of 1 percent and marking the 60th consecutive year of dividend increases. The company expects to make $73 million of interest payments in fiscal 2026 on its outstanding unsecured senior notes. The company expects pension benefit costs of $32.3 million and postretirement benefit costs of $7.7 million for fiscal 2026.

Major risks to the fiscal 2026 outlook include incremental inflationary pressures and the impact of deteriorating macroeconomic conditions on the company's customers, consumers, and operators. Risks to the Retail segment outlook include slowing consumer demand, unfavorable sales mix, and higher-than-expected operating costs. Risks to the Foodservice segment outlook include a softening of foodservice industry demand, lower-than-expected raw material markets which through market-based pricing can negatively impact net sales, and higher-than-expected operating costs. Risks to the International segment outlook include macroeconomic conditions in multinational markets, cost inflation, and global trade dynamics.

Risk Factors

The company faces material risks from its significant customer concentration, as sales to Walmart accounted for 15.6 percent of consolidated gross sales less returns and allowances in fiscal 2025, and the top five customers collectively represented approximately 38 percent . The company is exposed to impairment risk on its intangible assets, with the International reporting unit carrying goodwill of $258.9 million identified as at heightened risk of impairment, and indefinite-lived intangible assets at heightened risk totaling $683.3 million as of October 26, 2025. The company's operations are subject to food safety risks, as evidenced by a voluntary class 1 recall related to certain chicken products in the fourth quarter of fiscal 2025 and a voluntary recall of Planters products in the third quarter of fiscal 2024 due to potential Listeria monocytogenes contamination. The company also faces risks from commodity price fluctuations, as a 10 percent decrease in market prices for its cash flow commodity contracts would have negatively impacted fair value by $29.3 million as of October 26, 2025.

Management Priorities

Management characterized fiscal 2025 as a challenging year, noting that strong net sales performance did not translate into net earnings growth due to persistent input cost inflation primarily related to commodity markets, with pork belly, beef, and nut input costs causing the most earnings pressure. The company made meaningful progress on its multi-year Transform and Modernize initiative, which is expected to deliver long-term value, and recognized expenses associated with a corporate restructuring plan designed to reduce administrative expenses, improve efficiencies, and align the workforce to the company's future needs. For fiscal 2026, management provided guidance for organic net sales growth of 1 percent to 4 percent , diluted earnings per share of $1.29 to $1.39 , and adjusted diluted earnings per share of $1.43 to $1.51 , with segment profit growth expected from all three segments and earnings expected to decline in the first quarter followed by growth in each of the remaining three quarters.

View Source Annual Report on SEC.gov ↗

References

  1. [1] Item 1, Business — Significant Customers
  2. [2] Item 1, Business — Significant Customers
  3. [3] Item 7, MD&A — Segment Results
  4. [4] Item 7, MD&A — Segment Results
  5. [5] Item 7, MD&A — Non-GAAP Measures
  6. [6] Item 7, MD&A — Segment Results
  7. [7] Item 7, MD&A — Segment Results
  8. [8] Item 7, MD&A — Segment Results
  9. [9] Item 7, MD&A — Segment Results
  10. [10] Item 7, MD&A — Non-GAAP Measures
  11. [11] Item 8, Note D — Investments in Affiliates
  12. [12] Item 7, MD&A — Goodwill and Intangible Impairment
  13. [13] Item 8, Note C — Goodwill and Intangible Assets
  14. [14] Item 8, Note C — Goodwill and Intangible Assets
  15. [15] Item 8, Note C — Goodwill and Intangible Assets
  16. [16] Item 8, Note B — Acquisitions and Divestitures
  17. [17] Item 8, Note B — Acquisitions and Divestitures
  18. [18] Item 8, Note B — Acquisitions and Divestitures
  19. [19] Item 7, MD&A — Overview
  20. [20] Item 7, MD&A — Overview
  21. [21] Item 8, Consolidated Statements of Operations
  22. [22] Item 7, MD&A — Consolidated Results
  23. [23] Item 8, Consolidated Statements of Operations
  24. [24] Item 8, Consolidated Statements of Operations
  25. [25] Item 7, MD&A — Overview
  26. [26] Item 8, Consolidated Statements of Operations
  27. [27] Item 8, Consolidated Statements of Operations
  28. [28] Item 8, Consolidated Statements of Operations
  29. [29] Item 7, MD&A — Overview
  30. [30] Item 7, MD&A — Overview
  31. [31] Item 7, MD&A — Overview
  32. [32] Item 8, Consolidated Statements of Operations
  33. [33] Item 8, Consolidated Statements of Operations
  34. [34] Item 7, MD&A — Overview
  35. [35] Item 7, MD&A — Overview
  36. [36] Item 7, MD&A — Overview
  37. [37] Item 7, MD&A — Consolidated Results
  38. [38] Item 7, MD&A — Liquidity and Capital Resources
  39. [39] Item 7, MD&A — Overview
  40. [40] Item 7, MD&A — Overview
  41. [41] Item 7, MD&A — Liquidity and Capital Resources
  42. [42] Item 7, MD&A — Critical Accounting Estimates
  43. [43] Item 7, MD&A — Critical Accounting Estimates
  44. [44] Item 1, Business — Significant Customers
  45. [45] Item 1, Business — Significant Customers
  46. [46] Item 1A, Risk Factors — Intangible Assets
  47. [47] Item 1A, Risk Factors — Intangible Assets
  48. [48] Item 7A, Quantitative and Qualitative Disclosures About Market Risk
  49. [49] Item 7, MD&A — Overview
  50. [50] Item 7, MD&A — Overview
  51. [51] Item 7, MD&A — Overview
  52. [52] Item 8, Consolidated Statements of Operations
  53. [53] Item 8, Consolidated Statements of Operations
  54. [54] Item 8, Consolidated Statements of Operations
  55. [55] Item 8, Consolidated Statements of Operations
  56. [56] Item 8, Consolidated Statements of Operations
  57. [57] Item 8, Consolidated Statements of Operations
  58. [58] Item 8, Consolidated Statements of Operations
  59. [59] Item 8, Consolidated Statements of Operations
  60. [60] Item 7, MD&A — Consolidated Results
  61. [61] Item 7, MD&A — Consolidated Results
  62. [62] Item 7, MD&A — Consolidated Results
  63. [63] Item 7, MD&A — Consolidated Results
  64. [64] Item 8, Consolidated Statements of Financial Position
  65. [65] Item 8, Consolidated Statements of Financial Position
  66. [66] Item 7, MD&A — Segment Results
  67. [67] Item 7, MD&A — Segment Results
  68. [68] Item 7, MD&A — Segment Results
  69. [69] Item 7, MD&A — Segment Results
  70. [70] Item 7, MD&A — Segment Results
  71. [71] Item 7, MD&A — Segment Results

Analysis on 6/21/2026