Hormel Foods benefiting from, pressured by tight labor market

 

By Keith Nunes, Food Business News 

09.03.2021

 

AUSTIN, MINN. – A tight labor market was a boon and a bane for Hormel Foods Corp. during the third quarter of fiscal 2021. On the positive side, the company’s foodservice strategy is proving successful as operators seek to do more with fewer people. On the negative side, a shortage of workers prevented Hormel Foods from meeting demand in some product categories.

 

“For the quarter, we saw an acceleration in our foodservice business as sales grew 45% compared to last year,” said James P. Snee, chairman, president and chief executive officer, during a Sept. 2 earnings call to discuss third-quarter results. “What is even more impressive is sales increased 17% compared to 2019 pre-pandemic levels...

 

... Hormel Foods’ earnings were pressured by rising input costs...

 

... “Hog prices were up 250% compared to 20-year lows last year,” said James N. Sheehan, chief financial officer. “Additionally, the prices of pork remained elevated, caused by the recovery in the foodservice and the strong worldwide demand. The USDA composite cutout was up 50% compared to last year and 20% compared to the second quarter. Trim and belly prices also experienced inflationary pressure with significant volatility. Compared to the prior year, belly prices were 62% higher and trim prices were 27% higher” ...

 

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