Hormel Foods Corporation

This is our first report on Hormel Foods Corporation, one of the leading protein food companies across the globe. The company delivered double-digit earnings growth in the recent quarter but failed to meet the revenue expectations of Wall Street. The management continued its efforts to grow and protect its core brands. Sales in the company’s retail channel increased, led by brands like Mary Kitchen, Hormel Square Table, Dinty Moore, Hormel Natural Choice, SKIPPY, and SPAM. Hormel achieved another quarter of growth in organic sales led by its solid performances from its food service businesses and its center store grocery portfolio. Moreover, Hormel made progress in amplifying its presence in entertaining and snacking. It delivered excellent growth on Hormel Gatherings and Columbus brand and successfully integrated its Planters business. In the quarter, Hormel saw growth from its food and ethnic forward portfolios. Both its Applegate business and MegaMex joint venture achieved sales milestones. Hormel continued to make progress in its transformational efforts in the Jennie-O Turkey store. The company has recently announced that it has acquired one minority stake in Garudafood. During the quarter, it made additional progress across its supply chain despite the fact that warehousing and freight expenses remain elevated. We initiate coverage on the stock of Hormel with a ‘Hold’ rating.