Increased sales and volumes of value-added Jennie-O Turkey Store products were a strength for parent company Hormel Foods during the first quarter of fiscal year 2024.
However, whole bird turkey sales are a different story, executives with Hormel Foods explained during a quarterly earnings call on February 29.
Hormel Foods Chief Financial Officer Jacinth Smiley pointed out that they already expected headwinds for whole bird markets during the previous quarter, but greater headwinds are now being anticipated.
“On the commodity side of the whole bird, turkey markets have stabilized below our initial forecast. Consequently, we have included in our outlook incremental earnings pressure from lower-than-expected market pricing. We began absorbing this impact in the first quarter and expect continued pressure for the balance of the year,” Smiley said. “In the second quarter we expect earnings to be lower compared to last year.”
Hormel has already been in the process from shifting less emphasis on whole birds to value-added turkey products. For example, the company announced in 2021 announced the upcoming closure of its Benson Avenue plant in Willmar, Minnesota. At the time, Hormel CEO Jim Snee said that plant had more of a commodity turkey focus, and in shifting production, it helped the company move to a “more demand-oriented and optimized turkey portfolio that is better aligned with the changing needs of our customers, consumers and operators.”
The company reported “above-category performance in the fresh ground turkey category” for the quarter, with Smiley and Snee both optimistic that such a trend will continue, especially as supplies have rebounded after supply was severely constrained by highly pathogenic avian influenza (HPAI) losses in late 2022 and early 2023.
“Specific to turkey, overall inventory levels have recovered despite lingering impacts from cases of HPAI in the fall and early winter. Barring a significant supply disruption this spring from additional outbreaks of HPAI, we are in a strong position to service our customers and attract new business opportunities,” said Smiley.
“We made good progress regaining value-added turkey distribution in the retail and foodservice channels during the first quarter, and we expect this to continue for the rest of fiscal 2024.”
