Sales down, but earnings up at Hormel

Published 12:00 am Friday, August 16, 2002

Although sales were down, Hormel increased earnings in its third quarter, the company announced Thursday.

Last year at this time, Hormel had earned $37.2 million, but in this year's third quarter earnings were up $1.1 million to $38.3 million.

Sales were down $43.2 million at $933.8 million as compared to last year's $977 million.

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"We would like to see both (increase)," said Julie Craven, director of corporate communications. "But we were pleased to see these kind of earnings with the situation we're in."

Hormel has been challenged by an oversupply of protein and because live animal prices have been below the prices Hormel pays for producers.

"The challenges we have faced this year demonstrate the real value of our long-term growth strategies: build emerging businesses, strengthen existing brands, provide outstanding customer service and launch new brands," said Joel W. Johnson, chairman of the board, president and CEO of Hormel.

Hormel's growth in value-added products and rigorous cost management help to offset those challenges, according to Hormel.

In the third quarter, which ended July 27, sales of ethnic foods such as Herdez, Chi-Chi's Sauces and Marrakesh Express grains, grew. A product that was introduced during the third quarter, Dinty Moore Classic Bakes, has been well-received by retailers, according to Hormel.

Hormel's line of refrigerated foods, which makes up 53 percent of net sales, has been most affected by the protein oversupply and low live animal prices. Dollar sales in this area were down 5 percent from last year at this time.

Johnson said Hormel will continue with its Precept Foods initiative, in which it hopes to market Hormel Always Tender products to major grocery retailers.

"In the fourth quarter, we will continue to execute on our growth strategies," Johnson said.

Cari Quam can be reached at 434-2235 or by e-mail at