Hormel Foods Delivers Mixed Q4 Results, Raises Sales Outlook for 2026

Hormel Foods Corporation announced its fourth quarter and full-year fiscal 2025 results, highlighting a steady increase in net sales but facing challenges in profitability due to rising input costs and strategic investments. The company also provided guidance for fiscal 2026, focusing on growth and operational improvements.

Flat Sales and Higher Costs Weigh on Q4 Profitability

Hormel Foods Corporation (NYSE: HRL) has released its financial results for the fourth quarter and the full fiscal year 2025, revealing a mixed performance. The company reported net sales of $3.2 billion for the quarter, which was consistent with the previous year’s figures but did not surpass the revenue expectation of $3.24 billion. The adjusted earnings per share (EPS) for the quarter stood at $0.32, meeting the forecasted EPS, but without exceeding it. This performance reflects the company’s ongoing struggle with input cost inflation and impairment charges, which have significantly impacted profitability.

Despite these challenges, Hormel Foods managed to close the fiscal year with net sales of $12.1 billion, marking a 2% increase in organic net sales. The operating income for the year was reported at $719 million, with an adjusted operating income of $1,019 million. However, the operating margin saw a decline to 5.9% from the previous year’s 9.0%, indicating the pressure on the company’s profitability. The adjusted operating margin was slightly better at 8.4%, suggesting some level of operational efficiency despite the broader challenges.

In the fourth quarter, Hormel Foods faced a loss before income taxes of $22 million, primarily due to non-cash impairment charges related to a minority investment and certain intangible assets. The adjusted earnings before income taxes were $234 million, reflecting the company’s efforts to mitigate the financial impact of these charges. Cash flow from operations in the fourth quarter was robust at $323 million, providing a cushion for the company to navigate the current economic environment and invest in future growth initiatives.

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HRL Aims for EPS Acceleration and Margin Recovery in FY2026

Looking forward to fiscal 2026, Hormel Foods has set ambitious targets despite the current economic pressures. The company aims to achieve net sales in the range of $12.2 billion to $12.5 billion, with organic net sales growth projected between 1% and 4%. This growth is expected to be driven by strategic investments in brand leadership, operational excellence, and consumer-focused offerings. The company’s focus on protein-centric products and convenient solutions is anticipated to meet the evolving needs of consumers and support margin expansion.

Hormel Foods has outlined a clear path for improving profitability in fiscal 2026, with expected operating income ranging from $956 million to $1.03 billion. The adjusted operating income is projected to be between $1.06 billion and $1.12 billion, reflecting growth of 4% to 10%. The company’s strategic initiatives, including the Transform and Modernize (T&M) initiative and efforts to reduce administrative expenses, are expected to contribute significantly to this improvement. Additionally, Hormel Foods plans to increase its advertising investments to support brand growth and enhance market presence.

The company’s guidance for adjusted diluted earnings per share for fiscal 2026 is set between $1.43 and $1.51, indicating a growth of 4% to 10% from the previous year. Hormel Foods is optimistic about overcoming the initial earnings pressure anticipated in the first quarter, with earnings growth expected to pick up in the subsequent quarters. The company’s commitment to shareholder returns is further demonstrated by a 1% increase in its quarterly dividend, marking 60 years of uninterrupted dividend growth. This strategic focus on sustainable, profitable growth positions Hormel Foods to navigate the challenges of the current economic landscape while capitalizing on opportunities for expansion.

Disclaimer: The author does not hold or have a position in any securities discussed in the article. All stock prices were quoted at the time of writing.