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Hormel Foods (NYSE:HRL) delivered weaker-than-expected results for its first fiscal quarter and slashed the full-year profit forecast. Shares are trading 3.5% lower in pre-market Thursday.
The food-processing company posted a profit of $0.40 per share on sales of $3 billion, missing the average analyst consensus for earnings of $0.46 per share on revenue of $3.09B.
Sales declined by 2.4% year-over-year while the operating margin contracted by 76 basis points to 9.74%, below the expected 10.8%.
“The operating environment at the beginning of fiscal 2023 remained challenging,” said Jim Snee, chairman of the board, president and chief executive officer.
“While many areas of the business performed ahead of last year, our results were disappointing and below our expectations, reflecting the persistent impact from inflationary pressures, supply chain inefficiencies and lower-than-expected sales volumes across our business segments.”
As a result, the company slashed its full-year EPS range to $1.70-1.82 from the prior $1.83-1.93 and below the consensus of $1.89. The company expects its sales to grow 1-3% on a full-year basis.
Vital Knowledge analysts agreed with the CEO that results are “disappointing.”
Goldman Sachs analysts expect shares to underperform today.
“We expect HRL shares to underperform peers today, with FY1Q23 EPS well below consensus and the magnitude of the full-year guidance cut significant this early in the year relative to HRL’s history and premium valuation,” the analysts said.
