Hormel Foods (HRL) investor relations material

Recent performance and challenges

• Achieved 6% top-line growth in Q3, with all segments showing volume increases.

• Bottom line was pressured by rapid, persistent cost increases, especially in commodities.

• Pricing actions lag due to 60–90 day implementation periods, affecting Q4 outlook.

• Inventory build-up means benefits from easing markets will not be seen until the new fiscal year.

• Q4 expected to mirror Q3: strong sales, continued margin pressure.

Pricing strategy and brand management

• Foodservice pricing is largely pass-through, with short-term margin compression during cost spikes.

• Retail pricing involves strategic decisions, balancing cost coverage, consumer elasticity, and brand strength.

• Recent price increases focused on pork and beef-based products, with further actions under evaluation.

• Strong brands like Jennie O and Planters have successfully absorbed price hikes and driven category growth.

• Emphasis on maintaining category health and not alienating consumers with excessive pricing.

Leadership focus and strategic direction

• Leadership transition aims to combine deep company knowledge with broad industry experience.

• Key focus areas: achieving 2–3% net sales growth and 5–7% operating income growth.

• SG&A expenses under review for potential right-sizing to support 2026 goals.

• Strategic focus on extracting more value from a protein-centric, value-added portfolio.

• Ongoing modernization of brands, processes, and company culture through the Transform and Modernize initiative.