Hormel Foods Corporation ( HRL ) shares are trading lower in the premarket session on Thursday.

The company reported third-quarter adjusted earnings per share of 35 cents, missing the analyst consensus estimate of 41 cents.

Quarterly sales of $3.032 billion (+4.6%) outpaced the street view $2.980 billion. Organic net sales gained 6%.

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In the third quarter, retail saw volume and net sales rise 5% each, but segment profit slipped 4%.

Foodservice posted a 4% decline in overall volume (though organic volume rose 2%), while net sales grew 3% and organic net sales 7%, with segment profit down 1%.

International delivered strong volume growth of 8% and net sales up 6%, though segment profit fell 13%.

“I am proud of the top-line momentum we built in the third quarter,” said John Ghingo, president. “The gap between this performance and our profitability is not the outcome we were aiming for and certainly overshadows several bright spots across the business.”

Jeff Ettinger, interim chief executive officer, acknowledged the company’s mixed performance. “The third quarter demonstrated the relevance of our portfolio, evidenced by strong organic volume and net sales performance across each of our segments,” he said. “Our earnings results, however, were disappointing, and we fell short of our expectations. The steep rise in commodity input costs was the largest contributor to our shortfall.”

Looking ahead, Ettinger added, “We expect continued net sales growth supported by our leading positions in the marketplace. To address commodity inflation, we are taking targeted pricing actions. We expect profit recovery to lag into next year, with near-term pressures persisting through the fourth quarter.”

“We are confident in our portfolio’s ability to continue delivering impressive top-line results, despite today’s dynamic consumer environment, and we are committed to translating that performance into improved earnings,” said Ettinger.

Adjusted operating income in the quarter under review decreased to $254.24 million, from $267.20 million in the year-ago period. Adjusted operating margin contracted to 8.4% from 9.2% in the year-ago period.

The company exited the quarter with cash and equivalents worth $599.189 million, lower than $741.881 million as of October 27, 2024.

Inventories as of quarter end expanded to $1.821 billion, compared with $1.576 billion as of October 27, 2024.

Outlook

Hormel Foods ( HRL ) lowered its fiscal 2025 adjusted EPS guidance to $1.43–$1.45 from the prior range of $1.58–$1.68, below the analyst estimate of $1.60.

The company simultaneously raised its fiscal 2025 sales outlook to $12.10–$12.20 billion from $12.00–$12.20 billion, compared with the Street estimate of $12.118 billion.

The firm expects fourth-quarter adjusted earnings per share in the range of 38 cents to 40 cents, below the analyst estimate of 48 cents, and projects sales between $3.150 billion and $3.250 billion, compared to the analyst expectation of $3.234 billion.

Price Action: HRL shares are trading lower by 9.72% to $26.20 premarket at last check Thursday.

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