Hormel (NYSE: HRL) said the planned divestiture of its whole-bird turkey business is expected to reduce annual net sales by approximately $50 million, though the impact on net income is anticipated to be minimal.
The company recently agreed to sell the business to Minnesota-based Life-Science Innovations, although financial terms were not disclosed. The transaction is expected to close in the second quarter of Hormel’s current fiscal year.
Hormel, whose portfolio includes brands such as Skippy peanut butter and Spam, stated that its guidance does not account for unknown items related to the transaction, including potential gains or losses that cannot yet be reasonably estimated while the accounting implications are being evaluated.
President John Ghingo said the divestiture, which follows the earlier sale of Hormel’s majority stake in the Justin’s nut butter and organic chocolate snack brand, aligns with the company’s strategy to sharpen its focus on protein offerings.
Ghingo emphasized that the Jennie-O ground turkey brand remains a strategic component of the portfolio, and that the Life-Science Innovations transaction will allow the company to accelerate growth in value-added turkey categories where it holds a competitive advantage.
Hormel has faced pressure from rising raw material and logistics costs, which have affected profitability in its core retail segment. A bird flu outbreak disrupted poultry supply chains last year, while U.S. tariffs on Brazil contributed to higher beef prices.
In response to cost pressures, Hormel, alongside competitor Tyson Foods, implemented price increases on select products.
Company-wide net sales rose 1.3% to $3.03 billion, slightly below Wall Street expectations of $3.07 billion. Adjusted earnings per share were $0.35, unchanged from a year earlier and above Bloomberg consensus estimates of $0.32.
