Earnings

Hormel Stock Plunges to 10-Year Low on Soaring Pork Costs

Company cuts profit outlook for second time this year, citing a 30% spike in pork belly prices that is squeezing margins.

Shares of Hormel Foods Corp. plummeted 13% to a ten-year low on Thursday after the company missed third-quarter earnings estimates and slashed its full-year profit forecast, citing a dramatic and unforeseen surge in commodity costs.

The Austin, Minn.-based food producer, known for brands like Spam, Planters, and Jennie-O, saw its stock close at $25.22 after revealing that a 30% increase in the cost of pork bellies and record-high beef prices severely impacted its performance. The disappointing results prompted Hormel to lower its earnings outlook for the second time this year, signaling persistent pressure on its profitability.

In response to the rising costs, Hormel plans to increase prices for some of its products, a challenging move as consumers are already strained by persistent inflation. "We have to balance what is happening with the cost of goods," said Hormel President John Ghingo. "But we have to be very mindful of consumers, what they’re willing to pay and our brand strength." Ghingo added that the "cumulative effect of inflation is really straining consumers."

Alongside price hikes, the company is aggressively cutting its own expenses to protect its bottom line. Hormel announced this week that it had laid off 135 workers at a plant in Georgia and was relocating its bacon production to streamline operations and reduce costs.

The company is undertaking a broad review of its manufacturing footprint to “minimize touch points” for its products, according to Jacinth Smiley, Hormel’s chief financial officer. The moves underscore the significant challenge facing the packaged foods giant as it navigates a volatile commodity market and cautious consumer spending.