MINNEAPOLIS _ As Americans settle into life during a pandemic, Hormel's balance sheet shows where and what they are eating.
The Austin, Minn.-based food company surpassed Wall Street expectations on Tuesday in its latest quarterly earnings report covering the summer months when increased in-home consumption soared, boosting revenue 4% to $2.4 billion.
The company posted a $203 million profit, or 37 cents a share, beating the average estimate of 11 analysts polled by Thomson Reuters by 3 cents.
And while the company enjoyed record sales for the third quarter ended July 26, its profit growth was restrained by measures aimed at avoiding COVID-19 outbreaks, including costly new safety equipment, employee bonuses and reduced production at meatpacking plants.
Every aspect of Hormel's business has been affected by the ongoing novel coronavirus outbreak that's changed the way people eat. Some of Hormel's business segments, like U.S. retail and deli, were bolstered by consumers making more meals at home. Other segments, like foodservice, continue to suffer as restaurants and schools _ which are large Hormel customers _ serve fewer diners and students.
While Hormel sold 19% more goods at U.S. retail stores during the quarter compared to last year, its foodservice business dropped 19%.
"We expect the fourth quarter to mirror many of the dynamics we saw in the third quarter, including strength from our retail businesses and the ongoing recovery in our foodservice business," Hormel chief executive Jim Snee said in a press release. "However, the magnitude of additional recovery in the foodservice industry, the performance of the entire food supply chain and the state of the broader economy remain highly uncertain."
Executives revealed in May plans to spend between $60-80 million on COVID-19 safety equipment and procedures in the second half of the year. The company absorbed $40 million in extra costs during the third quarter.
