Hormel fiscal Q3 2026: GAAP EPS fell 67% to $0.11 on $155M of one-off charges, while adjusted EPS rose 6% to $0.37 on lower overhead as net sales fell 2.4% and volume fell 7.4%.
Revenue
$3.0B
-2.4% YoY
Net income
$60M
-67.6% YoY
Diluted EPS
$0.11
-66.7% YoY
Operating margin
3.7%
Overview
Hormel Foods' fiscal third quarter of 2026 (the three months ended July 26, 2026) produced two very different pictures. On the reported (GAAP) basis, profit collapsed: net earnings fell 68% to $59.6 million and diluted EPS fell from $0.33 to $0.11. But almost all of that drop came from $155 million of one-off, pre-tax charges: a $57 million loss tied to selling the Brazil business, a $48 million non-cash write-down of a minority investment in Indonesia, a $37.5 million antitrust litigation settlement, and $12 million of costs from its "Transform and Modernize" (T&M) cost program. Strip those out and adjusted EPS rose 6% to $0.37, and adjusted operating income rose 5% to $266 million.
The weaker part of the quarter is the top line. Net sales fell 2.4% to $2.96 billion, and volume (pounds shipped) fell 7.4%. Even after removing the Justin's peanut-butter business Hormel sold a controlling stake in last December (what the company calls organic figures — results as if the divested business had never been in either year), sales were down 1.7% and volume down 7.1%. Management's own list of reasons: lower sales of commodity turkey and bacon, a deliberate exit from some low-value private-label snack nut items, "lower commodity-based pricing in portions of the business," and "a consumer environment that remains under pressure."
This is the 10-Q for fiscal Q3 2026; Hormel's fiscal year ends in late October.
Key figures
Metric
Q3 FY2026
Q3 FY2025
YoY Change
Net sales
$2,961.3M
$3,032.9M
-2.4%
Organic net sales (non-GAAP)
$2,961.3M
$3,011.4M
-1.7%
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The organic prior-year figure removes $21.4 million of Justin's sales from Q3 FY2025. "Gross margin" is the share of sales left after the direct cost of making the products.
Where the charges came from
One-off item (pre-tax)
Q3 FY2026
Where it sits
Loss on divestitures (mostly Brazil)
$57.4M
SG&A (overhead)
Impairment of Indonesia minority investment
$48.2M
Equity in earnings of affiliates
Antitrust litigation settlement
$37.5M
SG&A
T&M initiative costs
$12.2M
Cost of sales and SG&A
Total
$155.3M
The tax rate jumped to 42.3% because, per the 10-Q, the Brazil loss and the Indonesia write-down came with little or no tax deduction: the adjusted tax line shows only $0.3 million of tax relief on the $57.4 million divestiture loss and none on the $48.2 million impairment. That's why GAAP net earnings fell even faster than pre-tax earnings (-56%).
The Brazil sale (the Ceratti brand) closed on July 31, 2026, just after quarter-end, for $22.1 million in cash. Earlier in the year Hormel also sold its whole-bird turkey business (April 2026, a $60.8 million pre-tax loss) and 51% of Justin's (December 2025, a $22.0 million pre-tax gain). These are the "portfolio-shaping" moves — trimming businesses management sees as lower-value — and they explain part of the sales shrinkage.
Segment performance
Segment
Volume YoY
Organic volume YoY
Net sales
Net sales YoY
Organic net sales YoY
Segment profit
Profit YoY
Retail
-9.1%
-8.6%
$1,779.4M
-4.3%
-3.3%
$118.1M
-3.7%
Foodservice
-1.5%
-1.4%
$1,003.2M
+1.6%
+1.8%
$144.5M
+2.7%
International
-10.8%
-10.8%
$178.7M
-4.7%
-4.4%
-$29.2M
n/m (vs. +$18.9M)
Retail (grocery, club, mass and dollar stores in the U.S.) is where the volume went. Pounds shipped fell 9%, driven by commodity turkey (whole turkeys and similar undifferentiated product sold largely on market price) and private-label snack nuts, some of which Hormel chose to stop selling. Branded lines did better: the 10-Q names value-added turkey, contract manufacturing, Planters snack nuts, SPAM, Applegate natural and organic meats, and Hormel chili as growing. Segment profit fell 3.7% as lower sales and higher logistics (shipping and warehousing) costs outweighed lower overhead. Retail's profit margin held at 6.6% of sales in both years.
Foodservice (products sold to restaurants, schools, hospitals and other operators) was the steady part of the business: its 12th straight quarter of organic sales growth. Growth came from premium prepared proteins (pre-cooked meats that save kitchen labor), branded pepperoni and Jennie-O turkey. Segment profit rose 2.7% to $144.5 million, helped by "favorable pork input costs" — cheaper pork to buy — partly offset by higher logistics and overhead. Foodservice now earns more profit than Retail on roughly 56% of Retail's sales.
International swung to a $29.2 million loss, entirely because the $48.2 million Indonesia write-down is booked here. Excluding it, adjusted segment profit was $19.0 million, flat on last year's $18.9 million: better results from minority investments offset weaker results in Brazil. Sales fell 4.7% partly because a one-time legal-entity transition delayed the recognition of some SPAM export sales — a timing issue the company describes as one-time, not a loss of demand.
Costs and margins
Cost of products sold fell 2.2%, but less than volume, so cost per pound rose. The 10-Q attributes the moves to "lower volume and favorable pork input costs," partly offset by "higher beef input costs and higher logistics expenses." Gross margin slipped from 16.1% to 15.9%: it improved in Foodservice and declined in Retail and International.
The main reason adjusted profit grew despite falling sales is overhead. Adjusted SG&A (selling, general and administrative costs, excluding the one-offs) fell 11.6% to $216.9 million, or 7.3% of sales vs. 8.1% a year earlier, "driven primarily by lower employee-related expenses and a reduction in marketing and advertising." Advertising alone fell 18% to $34 million, which the company says was "partially due to the timing of advertising campaigns," and it still expects full-year advertising to be comparable to last year. That means some of this quarter's savings should reverse in Q4.
A useful mix signal from the numbers themselves: net sales per pound rose from about $2.90 to $3.06 (our calculation from the reported sales and volume), about 5.5% higher. Hormel is selling fewer pounds but more of its higher-priced, branded products and fewer low-priced commodity ones.
Cash and balance sheet
Operating cash flow rose 54% to $241 million in the quarter and 47% to $769 million over nine months, which the 10-Q credits mainly to "improved inventory management and working capital performance." The quarter's $161 million in dividends was covered by operating cash flow after $68 million of capital spending. Cash stood at $840 million at quarter-end, up $169 million since the fiscal year began. $506 million of long-term debt has moved into "current maturities" (due within 12 months), a refinancing-or-repay decision coming up in fiscal 2027.
Takeaway: The 67% GAAP EPS collapse is almost entirely one-off charges; underlying earnings grew 6%. But that growth came from cutting overhead and advertising while sales and volume shrank — Retail pounds fell 9% — and Hormel itself says some of the ad savings were timing. Profit rising while sales fall can't continue indefinitely; Foodservice is the only segment currently growing its sales.
Guidance and outlook
Hormel raised and narrowed its fiscal 2026 adjusted EPS outlook to $1.45–$1.51 (from $1.43–$1.51), implying 6–10% growth, and raised adjusted operating income guidance to $1.08–$1.12 billion. At the same time it cut the sales outlook to $12.1–$12.2 billion (from $12.2–$12.5 billion) and organic sales growth to 1–2% (from 1–4%). GAAP diluted EPS guidance fell to $1.06–$1.12 (from $1.28–$1.37) to absorb this quarter's charges.
FY2026 guidance
Updated
Previous
Net sales
$12.1–$12.2B
$12.2–$12.5B
Organic net sales growth
1%–2%
1%–4%
Diluted EPS (GAAP)
$1.06–$1.12
$1.28–$1.37
Adjusted diluted EPS
$1.45–$1.51
$1.43–$1.51
With nine-month adjusted EPS at $1.11 (up from $1.05), the full-year range implies fiscal Q4 adjusted EPS of roughly $0.34–$0.40 and Q4 net sales of roughly $3.14–$3.24 billion (our arithmetic from the guidance and year-to-date figures). The Brazil business leaves the numbers from Q4 onward and will be excluded from organic comparisons.
Our read: the earnings outlook is credible given the overhead cuts already made, but the pattern of higher profit guidance alongside lower sales guidance says the growth is coming from cost control, not demand. The company's own caution — "continued pressure from the external environment, at a level greater than expected, could have an adverse impact on results" — and its plan to keep full-year advertising flat (implying heavier Q4 spend) are the things to watch. A new CEO, John Ghingo, is taking over from interim CEO Jeff Ettinger; whether Retail volume stabilizes once the deliberate exits stop showing up in the comparisons is the key question for fiscal 2027.