For the second consecutive quarter, Jennie-O Turkey Store saw an increase in volume, sales and segment profit.
Hormel Foods, parent company of Jennie-O Turkey Store, released the results of the first quarter of fiscal year 2020 on February 20. The quarter ended on January 26.
The Jennie-O segment recorded a profit of about $38.6 million, a 2% improvement when compared to the segment profit of $37.9 million for the first quarter of 2019. Volumes improved 8%, while net sales rose 3%.
"It is encouraging to see Jennie-O Turkey Store deliver a second consecutive quarter of volume, sales and profit growth while continuing to gain back Jennie-O lean ground turkey distribution,” said Jim Snee, president, CEO and chairman of Hormel Foods.
“Sales increased due to higher commodity and whole-bird volume and pricing. Jennie-O lean ground tray pack volume increased as incremental distribution was regained during the quarter. Segment profit increased due to higher commodity profits and operational improvements.”
Jennie-O Turkey store had previously lost distribution following declining customer confidence in the ground turkey products, following two recalls that occurred in November 2018 and December 2018. Both recalls were issued due to concerns about possible Salmonella contamination.
Snee credits the company’s sales and marketing staff for its work to regain that distribution.
“(The) sales and marketing teams have done a good job regaining Jennie-O lean ground turkey distribution. In conjunction with these efforts, we have broadened our advertising campaign for Jennie-O and continue to see positive results from those investments,” Snee said during a conference call with investors on February 20.
Snee believes that between the regained distribution, increased advertising and better market fundamentals for the company and turkey industry as a whole, the trend of increased volume, sales and segment profit will continue in future quarters.
While Jennie-O Turkey Store reported positive results, Butterball, the largest turkey company in the United States, is experiencing financial struggles. One day prior to the release of Hormel's financial results, Seaboard Foods, which owns a 50% non-controlling share of Butterball, reported that it lost $21 million on its investment in Butterball in 2019.
Also during the conference call, Hormel Foods Chief Financial Officer and Executive Vice President Jim Sheehan told shareholders they company will likely spend more on animal feed during upcoming quarters, due to the need for new feed formulations because of low protein in the corn crop.
