The second half of fiscal year 2015 hasn’t been easy for Hormel Foods subsidiary Jennie-O Turkey Store, but Hormel executives are hopeful the business segment can be revitalized during the second half of 2016.
During a quarterly earnings call held on November 24, Jeffrey M. Ettinger, Hormel Foods chairman and CEO, and James Snee, Hormel president and chief operating officer updated investors on the progress it is making since avian influenza struck a substantial percentage of the company’s turkey flocks earlier in the year.
“We look for Jennie-O Turkey Store to return to growth in the back half of the year, if there are no significant recurrences of highly pathogenic avian influenza,” said Snee. “Volumes will remain constrained in the early part of the year, as we continue to rebuild our system after significant bird losses.”
That avian influenza outbreak led to a substantial drop in sales for Jennie-O Turkey Store, with Ettinger reporting a 23 percent decline in profits for the fourth quarter, as well as an 18 percent sales decrease. The flocks are now repopulated, but because of the growth cycle for turkeys, it will still be a while before all is well with Jennie-O Turkey Store. Ettinger noted that the majority of the turkey meat for its value-added items comes from its tom turkeys with a 22-week market cycle.
“We will not be fully back to normalized volumes until at the earliest the second quarter of fiscal 2016,” said Ettinger.
And then there is the possibility that avian influenza could return to the U.S. as wild birds resume their annual southward migration. Jennie-O Turkey Store has stepped up its biosecurity efforts, and is proceeding with its plans to return to profitability during the second half.
And if avian influenza stays away, Jennie-O will further promote its brand by relaunching its “Make the Switch” advertising campaign, which encourages consumers to replace beef with ground turkey, which had been on hiatus since the flock losses began.