Spam saved the Soviet Union from the Nazis, according to Stalin, and now the curiously slimy cube of luncheon meat is responsible for a healthy third quarter at Hormel Foods Corp., company officials announced Thursday.
Fiscal third-quarter earnings for the Austin, Minn., company rose 14 percent, or about three cents a diluted share. The increase came largely because sales were strong for Spam, Hormel Chili, other processed meats and acquisitions, Senior Vice President and Chief Financial Officer Mike McCoy said.
"Hormel has consistently supported its brands, and this year launched a major advertising campaign of today's flavors," he said. "Many of our key brands, such as Spam luncheon meat, Mary Kitchen Hash and Hormel Chili increased market share over the last quarter.
"Overall, this was a good quarter for Hormel Foods," he said.
New Flavors, Slumping Economy
Spam and other Hormel's canned foods didn't become suddenly popular because of ravenous Brits and South Koreans -- the top-two international Spam consumers. McCoy said Spam was selling because of its new flavors, such as jalapeno-flavored Spam, more retailers featuring the product and the fact that canned foods are a staple during camping season.
The yellow-pink luncheon meat, which is made from heavily spiced pork shoulder, didn't do all the work by itself, though, he said. The slumping economy has made the traditionally thrift-oriented foods more appealing.
"The soft economy continues to have a negative impact," McCoy said. "People are eating less, often (at) home.
"I don’t think people are going to amusement parks as much as they used to," he continued a few minutes later. "I don’t think people are eating out as much."
McCoy also said two recent acquisitions, The Turkey Store and Diamond Crystal Brands Nutritional Products, were doing better than expected.
Hormel reported net earnings of $33.2 million, or 24 cents a diluted share, for the quarter ended July 28, compared with $29.1 million, or 21 cents, a year ago. Hormel's third-quarter sales rose 17 percent to $1.04 billion from $886.0 million a year ago.
For the first nine months, Hormel earned $113.6 million, or 81 cents a share, up from $109.2 million, or 77 cents a share, a year earlier. Sales rose to $3.0 billion, from $2.67 billion in the first nine months of last year.
The company's showing was nevertheless lower than expected. Earnings had been expected to rise by five cents per share, to 26 cents per share.
McCoy said record-high prices for ribs and pork bellies were cutting into profits, but expected prices to drop to more reasonable levels after Labor Day.
Turkey products now make up 23 percent of Hormel's sales, while 73 percent of sales come from pork products.
Reuters and the Associated Press contributed to this report.