The interim CEO of Hormel Foods said that even though the company is selling its assets connected to its whole bird business, what will remain of Jennie-O Turkey Store will make the business stronger and more responsive to consumer trends.
As expected, when Hormel Foods held its first-quarter earnings call on Feb. 26, a significant amount of time was spent discussing the company’s exit from the whole bird turkey business — a move the company announced nine days earlier.
“This strategic move creates a more focused turkey portfolio that enables increased investment in the value-added aspects of our Jennie-O business, where we can drive substantial margin expansion,” said Jeffrey Ettinger, interim CEO, during the call.
Under the proposed deal, Hormel will sell the Jennie-O plant in Melrose, Minnesota, the feed mill in Swanville, Minnesota, and associated assets to Life-Science Innovations (LSI), another Minnesota-based company with a long history in the turkey industry. LSI will also assume the supply contracts affiliated with the Melrose plant.
While the prepared remarks made by Ettinger and other company executives largely reiterated points previously made during the initial announcement and during the Consumer Analyst Group of New York (CAGNY) conference, the question-and-answer session of the call covered more details.
Chris Downing, an analyst with Bank of America, asked what percentage of the legacy Jennie-O portfolio involved the whole bird or hen portion of the business, offering a guess of 20%.
Ettinger said getting an exact figure immediately was difficult, particularly because Hormel hasn’t reported Jennie-O Turkey Store as its own business segment since 2022. However, he said Downing’s estimate of 20% was “not way off.”
“Jennie-O has been one of the two or three big players in the industry for a long time. We think we are an effective, low-cost producer. We have substantial tom assets that we are retaining indeed,” Ettinger said.
“We talk about selling the Melrose plant, but we’re actually keeping plants in Barron, Faribault, Willmar, Montevideo and Pelican Rapids.”
All of those plants mentioned by Ettinger are in Minnesota, except Barron, which is in Wisconsin.
The proposed transaction with LSI is expected to close during Hormel Foods’ second quarter, which is already underway.