Hormel Foods Corp. (NYSE:HRL) said the planned sale of its whole-bird turkey business is expected to reduce annual net sales by roughly $50 million, though the company anticipates only a minimal effect on overall earnings.
The food producer recently reached an agreement to sell the unit to Minnesota-based Life-Science Innovations, but financial terms of the transaction have not yet been disclosed. The deal is expected to close during the second quarter of Hormel’s current fiscal year.
The company noted that its current outlook tied to the transaction excludes any factors that remain uncertain, “including the impacts of gains/losses on the transaction that we are unable to reasonably estimate while evaluating the accounting implications.”
Portfolio reshaping toward protein focus
President John Ghingo said the divestiture forms part of a broader effort to streamline Hormel’s portfolio and concentrate on core protein categories. The move follows the company’s earlier sale of its majority stake in the Justin’s brand, known for nut butters and organic chocolate snacks.
Ghingo emphasized that Hormel’s Jennie-O ground turkey brand will remain a “strategic” part of the business, adding that the agreement with Life-Science Innovations enables faster expansion in “value-added turkey categories where we have a clear consumer advantage.”
Cost pressures continue to weigh on performance
Hormel has faced rising input costs and higher logistics expenses, which have pressured profitability within its retail segment. Industry-wide challenges have included disruptions linked to avian influenza affecting poultry supply chains and higher beef prices following U.S. tariffs on Brazilian imports.
In response to these pressures, Hormel — alongside competitor Tyson Foods — has implemented price increases across selected product lines.
Quarterly results mixed versus expectations
Company-wide net sales rose 1.3% to $3.03 billion, slightly below Wall Street expectations of $3.07 billion. Adjusted earnings per share came in at $0.35, unchanged from a year earlier but ahead of Bloomberg consensus estimates of $0.32.
Hormel shares traded lower in premarket U.S. trading Thursday following the update.