HRL Q1 Earnings Call: Revenue Misses, Guidance Lowered Amid Supply Chain and Consumer Headwinds

Packaged foods company Hormel (NYSE:HRL) fell short of the market’s revenue expectations in Q1 CY2025, with sales flat year on year at $2.90 billion. Its non-GAAP profit of $0.35 per share was in line with analysts’ consensus estimates.

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StockStory’s Take

Hormel Foods' first quarter performance reflected stable but pressured operating conditions across its portfolio. Management pointed to solid organic growth in core brands such as Applegate and Jennie-O turkey, as well as strong consumption trends in Mexican foods, including Herdez salsa and guacamole. CEO Jim Snee highlighted the company’s focus on providing value through quality, innovation, and convenience. Strategic moves—including the launch of new convenience breakfast items and expanded product lines—were cited as drivers of market relevance. However, management acknowledged softness in volumes, impacted by promotional timing, contract manufacturing, and ongoing consumer sensitivity to inflation, which has led to shifts in purchasing behavior.

Looking ahead, Hormel Foods’ leadership expects a meaningful ramp in performance in the second half of the year, supported by increased advertising behind flagship brands like Planters, new product innovation, and benefits from its Transform and Modernize (T&M) initiative. Management stressed the importance of Turkey and Planters as key growth drivers, while also cautioning about headwinds from tariffs, higher commodity costs, and a strained consumer environment. CFO Jacinth Smiley noted, “We are reaffirming our expectation for incremental benefits from the T&M initiative,” with anticipated margin improvement and operational efficiencies. Despite narrowing its full-year outlook, the company believes its diversified protein-centric portfolio and ongoing supply chain optimization efforts position it to deliver bottom-line growth.

Key Insights from Management’s Remarks

Hormel’s management attributed the quarter’s performance to continued product innovation, selective brand investment, and operational changes in its supply chain. Key leadership transitions and ongoing efforts to adapt to consumer trends shaped results.

• Applegate and Convenience Growth: The Applegate brand outperformed the edible category, fueled by new product launches such as lightly-breaded chicken and the Convenience Breakfast platform. Management emphasized that ongoing innovation and product differentiation are reinforcing brand strength and household penetration.
• Jennie-O Turkey Performance: Jennie-O lean ground turkey continued to show strong consumption gains, benefiting from consumer demand for lean, high-protein foods. Hormel’s strategic transformation of this business over recent years has enabled it to capture shifting preferences and maintain category leadership.
• Mexican Foods Momentum: The company’s Mexican foods portfolio, including Herdez salsa and refrigerated guacamole under the Herdez and Wholly brands, delivered double-digit consumption growth. Expansion into new meal solutions, like refrigerated entrees featuring el pastor, reflects a focus on authentic, convenient offerings.
• Supply Chain Initiatives: Hormel closed one of its three dry sausage facilities in California and opened a new distribution center in the Memphis metro area. These actions are part of its Transform and Modernize initiative to improve efficiency, customer service, and operational excellence.
• Leadership Changes: The company appointed Dr. Kevin Myers to lead supply chain operations, with a focus on transformation and operational efficiency. Additionally, Scott Aakre’s upcoming retirement as Chief Marketing Officer and the appointment of Jeff Baker as his successor were highlighted as part of a broader effort to ensure leadership continuity and brand evolution.

Drivers of Future Performance

Hormel expects second-half growth to be driven by increased marketing investment, execution on key brands, and operational efficiencies despite ongoing macro headwinds.

• Planters and Turkey as Growth Engines: Management expects Planters’ sales to recover fully in the back half, aided by stepped-up advertising, in-store promotions, and product innovation targeting younger consumers. The Turkey portfolio, especially value-added offerings like Jennie-O, is positioned for incremental growth as lean protein demand rises and competitors exit the market.
• T&M Initiative Savings: The Transform and Modernize initiative is expected to deliver $100 million to $150 million in incremental savings, supporting margin expansion and offsetting commodity inflation. Specific projects include facility consolidation, improved logistical networks, and end-to-end production planning using data analytics.
• Consumer and Tariff Headwinds: Management acknowledged that consumer sentiment remains strained due to inflation, leading to trading down and increased focus on value. Tariffs and higher pork, beef, and nut input costs are expected to pressure margins, although measured pricing and efficiency gains are intended to partially offset these impacts.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will monitor (1) the pace of Planters’ distribution and sales recovery, (2) margin improvement and realized savings from the Transform and Modernize initiative, and (3) continued growth in flagship protein brands like Jennie-O and Applegate. We will also track any material changes in consumer demand, commodity costs, and tariff impacts as additional indicators of execution against strategic goals.

Hormel Foods currently trades at a forward P/E ratio of 17.6×. Should you double down or take your chips? Find out in our full research report (it’s free).

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