The second quarter of fiscal year 2017 for Jennie-O Turkey Store proved to be a challenging one, as the company experienced a 29 percent decline in operating profit, a 6 percent decline in volume and an 8 percent decline in sales.
According to a press release from Hormel Foods, the parent company of Jennie-O Turkey Store, several factors contributed to the difficult quarter, which ended on April 30. Those included:
- Lower turkey commodity prices
- Pricing pressure from competing proteins
- Increased operating expenses
James Snee, president and CEO of Hormel Foods, stated that he did not expect those conditions to turn around immediately. We expect the pressure on Jennie-O Turkey Store to continue for the remainder of the fiscal year, given the oversupply in the turkey industry.”
Jennie-O Turkey Store accounts for about 18 percent of Hormel Foods’ net sales.
Hormel Foods results
As a whole, Hormel Foods reported net earnings of $211 million, down 2 percent from the net earnings achieved during the second quarter of fiscal year 2016.
The second quarter proved challenging for Hormel’s Specialty Foods segment, as sales declined 24 percent and segment profit declined 16 percent. However, the company said that decrease was largely related to Hormel’s divestiture of Diamond Crystal Brands and reduced contract packaging sales. Specialty Foods accounts for about 9 percent of Hormel’s net sales.
Hormel’s Grocery Products segment saw profits increase 15 percent, and its International segment increased profits 38 percent. The company’s fifth and largest segment, Refrigerated Foods, saw its profit remain flat on a year-over year basis.