Hormel Foods, a leading player in the food industry, has recently revised its earnings outlook and reduced its sales guidance for the fiscal year 2024. This announcement comes after the company's third-quarter results exhibited a decline compared to the previous year, sparking concerns among investors and analysts alike. The revised expectations indicate that Hormel anticipates adjusted earnings within the range of $1.57 to $1.63 per share for fiscal 2024.
This adjustment is a slight increase from previous projections of $1.55 to $1.65, signaling cautious optimism amid challenging market conditions. Analysts on Capital IQ have consensus expectations leaning towards normalized earnings per share at $1.59. However, the company has highlighted that production disruptions at its Virginia facility are projected to impact earnings by approximately $0.06 per share, a factor contributing to the broader revision. As a result of the earnings revision, Hormel's stock experienced a significant decline of 6.8% in premarket trading, reflecting market sensitivity to these adjustments.
The company's sales forecast has also been scaled back, now estimated between $11.8 billion and $12.1 billion for the current fiscal year. This represents a noteworthy shift from the previous outlook of $12.2 billion to $12.5 billion. Factors influencing this adjustment include lower-than-expected commodity markets, ongoing production disruptions at the Virginia facility, and a decline in the contract manufacturing segment. The broader market expectations indicate that analysts are projecting revenue of approximately $12.13 billion for Hormel this year. Reflecting on the company's trajectory, Chief Executive Officer Jim Snee expressed commitment to strategic priorities, stating, "Our team remains focused on finishing the year strong and executing on our strategic priorities." He mentioned that for the fourth quarter, Hormel expects to see continued momentum in many key retail brands, highlighting anticipated growth in both foodservice and international businesses. In the third quarter, which ended on July 28, Hormel reported an adjusted EPS of $0.37, a decrease from $0.40 recorded in the same period in the previous year.
Nevertheless, this figure outperformed consensus estimates, which were pegged at $0.36. Annual sales figures showed a decline of 2.2%, reaching nearly $2.9 billion, which fell short of analyst expectations of $2.96 billion. Additionally, total volume reported an alarming drop of 6.9% during this period. The company also detailed revenue trends across its different segments, noting a decrease in retail product sales amounting to 6.6% year over year, totaling $1.77 billion.
Key contributors to this decline were lower volumes and prices of whole-bird turkeys, along with reduced sales from the Planters snack nuts line. Conversely, the foodservice segment saw a robust gain of 7.1%, generating $954 million, fueled by strong performances in turkey, bacon, premium prepared proteins, and pepperoni categories.
However, international sales faced challenges, slipping to $177.2 million from $180.6 million in the previous year's quarter. Snee noted positive trends amid challenges, remarking, "The foodservice business continued to deliver above-industry growth, while we observed significant recovery in our international segment." He also mentioned ongoing benefits derived from Hormel's initiative to transform and modernize operations, which is yielding impactful improvements throughout the supply chain. In conclusion, Hormel Foods is navigating through a period of adjustment as it recalibrates its financial expectations while striving for growth across its key business sectors.
Investors and market watchers will be keenly observing how the company implements its strategic priorities and manages the ongoing challenges to its earnings and sales forecasts..