Hormel Foods Q1 Organic Sales Up 2%, EPS $0.34; Divests Turkey Unit
Hormel delivered 2% Q1 organic sales growth, adjusted EPS of $0.34 and maintained FY guidance of 1–4% organic growth and $1.43–$1.51 EPS. Rising commodity costs—pork trim up 12%, beef and nuts elevated—and higher logistics expenses pressured margins, prompting divestiture of the whole-bird turkey business to eliminate $50M in low-margin sales.
1. Q1 Financial Results
Hormel reported fiscal Q1 net sales of just over $3 billion with 2% organic growth, adjusted operating income of $247 million and an 8.2% operating margin. Diluted EPS was $0.33 and adjusted EPS was $0.34, while full-year guidance remains 1–4% organic sales growth and $1.43–$1.51 adjusted EPS.
2. Commodity and Logistics Pressures
Management cited persistent commodity inflation—pork trim costs up 12% year-over-year, elevated beef and nut prices—alongside tighter refrigerated freight capacity driving spot rates higher. The company forecasts only modest commodity relief in the back half of fiscal 2026.
3. Divestiture of Turkey Business
Hormel agreed to sell its whole-bird turkey operations, including the Melrose, Minnesota facility and related assets, to Life-Science Innovations. This move will reduce net sales by about $50 million and sharpen focus on higher-margin, value-added protein products.
4. Segment Performance and Initiatives
Foodservice and International achieved high single-digit organic sales and profit growth, while Retail net sales fell 2% due to exiting non-core private label snacks. Pricing actions in Q2 aim to offset cost pressures, and the Transform and Modernize initiative is set to deliver savings starting in Q2 alongside leadership appointments.