Hormel Foods Announces New Strategic Operating Model

Rhea-AI Summary

Hormel Foods Corporation (NYSE: HRL) is transitioning to a new strategic operating model, effective October 31, 2022, to enhance agility and customer focus. The company will restructure into three segments: Retail, Foodservice, and International, each tailored to meet market demands and foster growth. This change is designed to strengthen brand leadership and expand global presence, supported by a new center of excellence called Brand Fuel. Hormel aims to report earnings under this model starting Q1 fiscal 2023, with no impact on historical financials.

Positive

• Transitioning to a more agile and market-driven operating model.
• Creation of three focused segments: Retail, Foodservice, and International.
• New center of excellence, Brand Fuel, aimed at enhancing brand management and innovation.

Negative

• None.

Company transitioning to three operating segments to drive sustainable growth

AUSTIN, Minn., Aug. 9, 2022 /PRNewswire/ -- Hormel Foods Corporation (NYSE: HRL), a Fortune 500 global branded food company, today announced a new strategic operating model, aligning its businesses to be more agile, consumer and customer focused, and market driven. Effective Oct. 31, 2022, the beginning of fiscal 2023, the company is transitioning to three operating segments – Retail, Foodservice and International. The One Supply Chain team will continue to oversee the company's global supply chain.

"Hormel Foods is a distinctly different company than it was a decade ago, with a food forward, growth-oriented portfolio of leading brands and products that are aligned with our customer and consumer needs," said Jim Snee, chairman of the board, president and chief executive officer at Hormel Foods. "Our new operating model is a culmination of our recent strategic actions, which included numerous portfolio-building acquisitions, including the Planters^® snacking business, the creation of One Supply Chain, the modernization of our technology and ecommerce capabilities, and most recently, our transformational efforts at Jennie-O Turkey Store. This new alignment will empower our 20,000 global team members, with a more refined organizational structure that is accountable, nimble and focused on creating the Hormel Foods of the future."

The new operating model will support the company's six strategic priorities:

• Expand leadership in foodservice;
• Protect and grow its core brands;
• Aggressively develop its global presence;
• Amplify scale in snacking and entertaining;
• Enhance growth of its ethnic and food forward portfolios; and,
• Continue to transform the company.

The company's largest operating segment – Retail – will include its most iconic brands, many that hold a No. 1 or No. 2 market share in their respective categories. The retail segment will be focused on Hormel Foods powerhouse consumer brands in the retail marketplace. These brands include the recently acquired Planters^® and Corn Nuts^®, in addition to SPAM^®, SKIPPY^®, Columbus^®, Applegate^®, Hormel^® Natural Choice^®, Jennie-O^®, Hormel^® Black Label^®, Herdez^®, WHOLLY^® and Justin's^®. The new Retail segment will be led by Deanna Brady, who will be executive vice president of Retail. Brady currently oversees the company's Refrigerated Foods segment.

The Retail segment will be powered by a new center of excellence called Brand Fuel. Over the last several years, the company has focused on the importance of leveraging its innovation, consumer insights and technology to enable connections with consumers where and how they shop. Brand Fuel will be a food forward hub, housing brand management expertise, world-class marketing capabilities and insights-led innovation, and will further enable data-driven decisions for the enterprise. This center will also house the Digital Experience Group, the company's ecommerce and digital content team that supports the company's brands and businesses in the virtual marketplace.

The Foodservice operating segment will serve leading foodservice establishments, including restaurants, hotels, educational and health care institutions, convenience stores and entertainment venues. The company's sales into the foodservice channel have continued to experience growth due to its portfolio of branded, value-added products and market leadership positions in the pizza toppings and bacon categories. The new Foodservice operating segment will combine the company's domestic foodservice businesses and will remain focused on partnering with customers to deliver culinary solutions for today's dynamic environment. This segment will be led by Mark Ourada as group vice president of Foodservice.

The International segment will continue to focus on aggressively growing its presence outside the United States. This includes growing global brands such as SPAM^® and SKIPPY^®, accelerating growth and investment in China, Brazil and Indonesia, and further leveraging its partnerships in the Philippines, South Korea and Europe. The company recently announced a new R&D and innovation center will be opening in China in fiscal year 2023 to serve as its food forward innovation and culinary creation hub for the Asia-Pacific region. Swen Neufeldt will continue to lead the company's international business as group vice president, president of Hormel Foods International Corporation.

Hormel Foods will begin operating under the new model Oct. 31, 2022. Earnings will be reported under this structure beginning in the first quarter of fiscal 2023. Changes to the company's operating segments have no impact on historical consolidated results of operations, financial position or cash flows. Recast financial information will be provided at a later date to aid in comparability to historical financial data.

Updates on the new strategic operating model will be provided on the fiscal third-quarter earnings call, scheduled for Sept. 1, 2022, and during the company's presentation at the Barclays Global Consumer Staples Conference, scheduled for Sept. 6, 2022.

Hormel Foods worked with Bain & Company, one of the world's top global management consulting firms, on the initiative.

ABOUT HORMEL FOODS — Inspired People. Inspired Food.™
Hormel Foods Corporation, based in Austin, Minn., is a global branded food company with over $11 billion in annual revenue across more than 80 countries worldwide. Its brands include Planters^®, SKIPPY^®, SPAM^®, Hormel^® Natural Choice^®, Applegate^®, Justin's^®, WHOLLY^®, Hormel^® Black Label^®, Columbus^®, Jennie-O^® and more than 30 other beloved brands. The company is a member of the S&P 500 Index and the S&P 500 Dividend Aristocrats, was named on the "Global 2000 World's Best Employers" list by Forbes magazine for three years, is one of Fortune magazine's most admired companies, has appeared on the "100 Best Corporate Citizens" list by 3BL Media 13 times, and has received numerous other awards and accolades for its corporate responsibility and community service efforts. The company lives by its purpose statement — Inspired People. Inspired Food.™ — to bring some of the world's most trusted and iconic brands to tables across the globe. For more information, visit www.hormelfoods.com.

FORWARD-LOOKING STATEMENTS
This news release contains "forward-looking" information within the meaning of the federal securities laws. The "forward-looking" information may include statements concerning the Company's outlook for the future as well as other statements of beliefs, future plans, strategies, or anticipated events and similar expressions concerning matters that are not historical facts. Words or phrases such as "should result," "believe," "intend," "plan," "are expected to," "targeted," "will continue," "will approximate," "is anticipated," "estimate," "project," or similar expressions are intended to identify forward-looking statements. Such statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical earnings and those anticipated or projected, which factors include, but are not limited to, risks related to the deterioration of economic conditions; the COVID-19 pandemic; risks associated with acquisitions and divestitures; potential disruption of operations including at co-manufacturers, suppliers, logistics providers, customers, or other third-party service providers; risk of loss of a material contract; the Company's inability to protect information technology systems against, or effectively respond to, cyber-attacks or security breaches; deterioration of labor relations, labor availability or increases to labor costs; general risks of the food industry, including food contamination; outbreaks of disease among livestock and poultry flocks; fluctuations in commodity prices and availability of raw materials and other inputs; fluctuations in market demand for the Company's products; risks of litigation; potential sanctions and compliance costs arising from government regulation; compliance with stringent environmental regulation and potential environmental litigation; and risks arising from the Company's foreign operations. Please refer to the cautionary statements regarding "Risk Factors" and "Forward-Looking Statements" that appear in our most recent Annual Report on Form 10-K and quarterly reports on Form 10-Q, which can be accessed at hormelfoods.com in the "Investors" section, for additional information. In making these statements, the Company is not undertaking, and specifically declines to undertake, any obligation to address or update each or any factor in future filings or communications regarding the Company's business or results. Though the Company has attempted to list comprehensively these important cautionary risk factors, the Company wishes to caution investors and others that other factors may in the future prove to be important in affecting the Company's business or results of operations. The Company cautions readers not to place undue reliance on forward-looking statements, which represent current views as of the date made.

Media Contact: 
media@hormel.com  
507-434-6352

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SOURCE Hormel Foods Corporation

FAQ

What is Hormel Foods' new strategic operating model announced on August 9, 2022?

Hormel Foods announced it will transition to a new strategic operating model effective October 31, 2022, organizing into three segments: Retail, Foodservice, and International.

When will Hormel Foods start reporting earnings under the new operating model?

Hormel Foods will begin reporting earnings under the new operating model in the first quarter of fiscal 2023.

What are the main goals of Hormel Foods' new operating segments?

The new operating segments aim to enhance agility, drive sustainable growth, protect core brands, and expand global presence.

What is Brand Fuel in Hormel Foods' new operating model?

Brand Fuel is a new center of excellence focused on brand management, innovation, and leveraging technology to connect with consumers.

How does the new operating model impact Hormel Foods' historical financials?

The changes to Hormel Foods' operating segments will have no impact on historical consolidated results of operations, financial position, or cash flows.