Spam parent Hormel soars as food-service rebound, pizza topping growth drive sales

Hormel Foods Inc. stock rose 8.3% Thursday after the parent company of Spam, Skippy Peanut Butter and Jennie-O-Turkey saw sales jump 28%.

The food service category prevailed during COVID-19 as many cafeterias, event stadiums, and other venues were closed or had limited capacity.

Hormel said it has taken steps to meet its customers’ business needs, including a rebate program to offset grocery bills, payment extensions, and measures to help businesses transition to an increase in take-out and delivery.

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Hormel also put its direct sales team into action to help operators with products that can help make food preparation easier and minimize labor.

The company cited items like Wholly Guacamole, Hormel Fire Braised Meats, and the brand’s fully cooked bacon as items that were helpful during these fluctuating times.

“The brightest spot in our food service portfolio was our pizza toppings business,” said James Snee, CEO of Hormel, according to FactSet on the call for results.

“Before the pandemic, we took advantage of the ongoing growth in this category, especially in premium products, and invested heavily in capacities to meet future demand.”

Hormel also invests in plant-based hot peppers and other plant-based meat alternatives.

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Foodservice sales increased 28% for the quarter. The chilled grocery segment grew 32%, thanks to the growth in food service, according to Snee.

Premium breakfast items such as the Old Smokehouse brand also recovered.

And items usually found in the middle of the grocery store, like Spam, Hormel Chili, and Mary Kitchen Hash, rose 20% compared to Q2 2019.

Hormel reported Second quarter earnings and sales that exceeded expectations.

The company has invested in a food products distribution center and chilled products distribution center which, according to Snee, “will reduce total freight miles and costs, improve customer service, support the growth of our value-added businesses and reduce greenhouse gas emissions. ”

Hormel increased its revenue outlook for the full year from $ 9.70 billion to $ 10.30 billion to $ 10.20 billion to $ 10.80 billion. The company continues to expect earnings per share of $ 1.70 to $ 1.82.

The Hormel outlook does not include the impact of the Planters acquisition. announced in February.

The FactSet consensus assumes sales of $ 10.10 billion and earnings per share of $ 1.73.

“We have a very positive outlook for the food service industry and continue to see increased demand in retail, deli and international channels,” Snee said in a statement.

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Looking to the future, Hormel predict further increases.

“[W]We are increasingly confident that K-12 schools, colleges, and universities will open and operate in a more traditional fashion this fall. This should benefit both chilled foods and the Jennie-O Turkey Store, ”said Snee.

The Hormel share has gained 5.9% over the year to date, while the S&P 500 index
SPX, + 1.06%
rose by 10.7% in the reporting period.

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