By Connor Hart

Hormel Foods' turnaround efforts are starting to pay off, as the company logged higher sales and profit in the recent quarter and guided for continued growth this year.

Still, the maker of Skippy peanut butter, Planters nuts and Spam warned that it continues to operate in a challenging environment, and that elevated commodity costs may pressure margins over the coming year.

Hormel said Thursday that recent efforts to revamp its distribution network, invest in technology and cut costs have improved profitability. The company is also benefiting from continued demand for protein and a second round of price increases, which were enacted last month in response to persistent inflation across commodities such as beef, pork trim and nuts.

"Our restructuring program is progressing as planned," interim Chief Executive Jeff Ettinger said. "The financial benefits from this program will start to materialize more meaningfully in the second quarter."

The Austin, Minn., company expects to post another quarter of top-line growth in its fiscal second quarter, after sales ticked 1.3% higher, to $3.03 billion, during its three months ended Jan. 25. Analysts polled by FactSet had expected sales of $3.07 billion.

Profit rose to $181.8 million, compared with $170.6 million a year earlier, while adjusted earnings of 34 cents a share topped the 32 cents a share that Wall Street modeled.

Hormel said its bottom line was pressured during the recent quarter, though, by higher-than-expected transport expenses due to adverse winter weather, as well as continually rising costs.

"As expected, commodity input costs mainly for beef, pork trim and nuts were a headwind in the first quarter," interim Financial Chief Paul Kuehneman said. "For context, beef remained a significant inflationary pressure across the industry, and pork trim increased 12% compared to last year."

The company continues to expect a modest improvement in commodity markets during the back half of the year, he added.

At the same time, Hormel is operating in a challenging consumer environment, executives said, marked by limited industry-wide retail consumption growth and notable pressure in food-service channels as operators and consumers remain cautious.

Hormel said it would address these challenges in part by continuing to reshape its portfolio. The company has recently exited some of its non-core businesses, and it additionally plans to divest its whole-bird turkey business by the end of the current quarter.

The sale will support the company's goal to reduce exposure to volatile, commodity-driven businesses, Ettinger said.

"The sale involves the hen side of our turkey complex, which are the female birds that you would typically enjoy during the holidays," he said, as well as a production facility and feed mill, both in Minnesota, and associated transportation assets.

"The sale will not affect our value-added turkey products, and we will continue to own and use the Jennie-O brand name," Ettinger added. "Value-added turkey will remain a strategic and important part of our growth story."

Looking forward, Hormel guided for adjusted per-share earnings to be flat to up slightly in the current quarter, compared with a year earlier. The company backed its fiscal-year outlook for adjusted earnings of $1.43 a share to $1.51 a share, on sales of $12.2 billion to $12.5 billion.

Write to Connor Hart at connor.hart@wsj.com

(END) Dow Jones Newswires

February 26, 2026 14:38 ET (19:38 GMT)

Copyright (c) 2026 Dow Jones & Company, Inc.