Hormel Foods reaffirmed its full-year sales revenue outlook of $12.2bn to $12.5bn for fiscal 2026, despite headwinds from elevated fuel, logistics, and commodity costs that will intensify in the third quarter. The company achieved 3% organic growth in the second quarter but flagged that fuel costs will create a "significant new headwind" in Q3, where the business will face 13 weeks of elevated fuel expenses compared to six weeks in the prior quarter.
Interim CEO Jeffrey Ettinger told analysts that the company "believes we are trending towards the upper half of our earnings range" but opted to maintain guidance to "appropriately reflect near-term dynamics." The adjusted diluted earnings per share forecast remains at $1.43 to $1.51, representing 4% to 10% growth. Reported diluted EPS guidance was lowered to $1.28 to $1.37 to account for the planned disposal of the whole-bird turkey business announced in February, which will reduce full-year sales by approximately $50m.
Protein demand has remained resilient even as consumer sentiment weakens. President John Ghingo said that "food has remained resilient in recent months, particularly with growth in protein, where our portfolio is well positioned." The company initiated pricing actions in retail and foodservice during the second quarter but acknowledged that work remains across some brands that are underperforming.
Hormel plans inventory rebalancing in the ambient category that will create near-term cost pressure primarily in Q3 due to lower plant utilization. CFO Paul Kuehneman noted that the company has "plans in place to continue to mitigate these headwinds" but that the logistics environment "remains dynamic." Pork and beef costs stayed elevated in Q2 and could persist as headwinds into Q3 and beyond.
By segment, full-year retail sales are expected to deliver flat to low single-digit growth, while foodservice likely posts mid-single-digit growth. The international division is anticipated to achieve high single-digit growth. Profit margins are expected to face pressure in the back half from fuel, commodity, and inventory rebalancing costs. Hormel expects bottom-line growth in the second half to come "primarily in Q4."