Jennie-O Turkey Store’s financial performance during the third quarter of fiscal year 2017 was disappointing, as it continued to be hindered by three basic factors that its parent company’s CEO had earlier identified at the end of its first quarter.
Jim Snee, CEO of Hormel Foods, during a quarterly earnings call on August 24, pointed out that its Jennie-O Turkey Store segment saw a 20 percent decline in earnings when compared to the third quarter of fiscal year 2016. He also noted that sales were down 9 percent and volume was down 7 percent. The company’s third quarter concluded on July 30.
Snee added that some of the decline in volume and sales was driven by a company decision to reduce production levels, but he said three other main issues affected profits this quarter. Those are:
1. Low turkey markets
The turkey markets have remained relatively unchanged. Snee said Jennie-O continues to operate in markets where lower turkey prices on a year-over-year basis are adversely affecting both commodity sales prices and value-added pricing
2. Elevated competition
Jennie-O Turkey store has faced increased competitive activity from other turkey suppliers and competing proteins, which has pressured the company’s results. Snee specifically mentioned beef as one of those competing proteins.
3. Increased expenses
Snee reported that Jennie-O Turkey store incurred higher operating expenses, primarily related to bird performance issues related to both its conventional flocks and its turkeys that are raised without antibiotics. Snee added that the company is working hard to address performance issues through changes in feed and other live production factors.
Jennie-O Turkey Store, according to the WATTAgNet Top Companies Database, is ranked second among turkey companies in the United States, trailing only Butterball. In 2016, Jennie-O Turkey Store slaughtered 1.275 million pounds of live turkeys. Jennie-O Turkey Store is headquartered in Willmar, Minnesota.