Deanna Brady: Rupesh, this is Deanna. I just wanted to tag team on that from a supply chain standpoint, but from a retail standpoint, we’ve been not only managing to the current environment, but continue to stay focused on standing up Go Forward and what that looks like and really starting to see the benefit. As you think about — Go Forward was to align our structure to our strategy. And if we think of one of our company strategies of snacking and entertaining, the team has been really a cross-functional team dedicated to modernizing the Planters business as an example. The team has made significant progress, and we’re seeing that play out. A few things that we’ve done as we pull our resources around Planters in particular, we’ve pulled up our innovation pipeline.
We’re currently in market with 3 new flavors of cashews. We’ve quickly come to market with advertising to support that new launch, help to surrender to the cashew, and we’re having great response pulls from our retailers and our consumers. Additionally, the team has looked at capital expenses and modernizations that we need in the plant to align with the consumer and packaging as well as a really robust innovation pipeline that’s coming at us. And then from a sales execution against Planters, again, as a benefit of Go Forward, thinking about hard about regaining distribution, we did a price pack architecture study in the first half of the year, and the team is out working with our retailers to help them think about the category itself and the set and that price pack architecture work is helping us have really fruitful, insightful and analytical conversations with our retailers about how we grow together and how we can both meet the consumer with products that are going to be relevant and provide category growth.
Operator: Your next question comes from Tom Palmer from JP Morgan.
Tom Palmer : I think in the past, what we have seen with the whole turkey business is falling commodity prices don’t always flow through the retail business immediately just given how supply contracts are structured. You made a comment about unique market dynamics and customer behavior for whole birds. I just wanted to unpack what’s happening. Is the net of this that whole bird prices are coming down at retail may be faster than we typically see? Or did you mean something else by that?
Jim Snee: No, that’s correct, Tom. I mean I think at this point in the year, you’d see some higher bookings but as the market has declined, I think there is a bit more of a wait-and-see mentality and so that’s really what we’re talking about when we’re saying that there’s some unique market dynamics.
Tom Palmer : And then just on the competitive environment at retail and your comment about the promotional activity, just categories stepping up. Are these – I guess, first, like what are the categories where you’re seeing that competition and promotional activity most intense? And then how would you describe kind of the start of that activity? Is it you’re running it to drive share in certain categories? Or is the promotion step up on your side more in response to what you’re seeing from competitors?
Deanna Brady: Tom, this is Deanna. Thanks for the question. This isn’t new for us, although it’s new probably over the last couple of years as companies have pulled back on promotions just because of supply and high demand. So this isn’t new for us. And having promotional activity as well as a balance with our baseline business is really normal, but it hasn’t been normal in the last few years. So as we re-enter promotional activity, we have the opportunity to really think about it strategically and to leverage our revenue growth management team and price pack architecture work to really inform and sit down with the retailers to say, how do we do this, that’s really positive for both of us. And how do we ensure that we’re meeting the consumer and that we’re reminding the consumer about our products the value that they provide as well as keep them coming in the store, either in-store or online.
And so we’re thinking about both our digital activation, our in-store activation. And it really goes beyond just a promotion or price point. We need to make sure that we have advertising in place as well. We need to make sure that we have innovation. So I point again to the Planters example where we have innovation, coupled with advertising and promotion in place and it’s working. From other categories, we’re really, again, as we re-enter promotional, trying to do it as smart as we can, I point to bacon. We’ve had a lot of good activity and growth in bacon this past year. We’ve had a cadence of promotional activity at bacon, advertising, as well as we’ve got innovation coming in the bacon category that we’re really excited about in 2024.
Jim Snee: And Tom, at an even higher level, Deanna gave you a great answer. When we said heightened competition at retail, I think it’s fair to say that we are seeing demand normalizing to some more historical levels. Edible sales flat versus last year. Units have declined since 2019. And so as you’ve got that and supply chains have somewhat normalized, that I’m not going to say everywhere there’s capacity, but there’s probably some additional capacity in the industry and fill rates get better, there’s work to make sure that you’re filling that up. So it’s that at a higher level. And then to some of the specific activities that we’re working on that Deanna talked about, that’s really what we meant when we say heightened competition at retail.
Operator: [Operator Instructions] Your next question comes from Adam Samuelson from Goldman Sachs.
Adam Samuelson : I guess the first question is trying to maybe clarify on tying the turkey comments, specifically. I think previously, I know Jennie-O is on a reported segment as such any more of a previously playing turkey profitability in fiscal ’23 as being roughly flat year-on-year. Is it fair to say that, that’s a decent chunk of the outlook cut today is attributable to turkey, and so that is going to be down a decent amount year-on-year even with the volume recovery from HPAI.
Jim Snee: Yes. I think that’s fair to say, Adam, is to be slightly down year-over-year. That’s really due to some of these Q4 issues that we’ve talked about.
Adam Samuelson : Okay. And I guess just to the Q4 point, I mean, the full year range, you’ve got 1 quarter left. The sales range widened relative to your prior guidance, you have the EPS range narrowed. And I appreciate that maybe there was a pretty wide EPS range previously. But can you just help us understand kind of the puts and takes around, is it just the uncertainty on some of the commodity pork cuts and some of the turkey [Holberg] pricing. We’ve got much uncertainty on volume. And why wouldn’t that revenue volatility kind of manifest in a wider EPS range out of the outlook has been recalibrated.
Jacinth Smiley: So Adam, I’d say for all the reasons that Jim talked about in terms of just the dynamic that we’re seeing here and just the volatility, that is exactly why we have the ranges that we have as we sit here at the moment.
Adam Samuelson : Okay. But that’s certainly on revenue, but why would that change in revenue not fall to the earnings line? And why would it fall — why would there be more volatility previously on the range of outcomes on earnings and less on revenue today. Just with 1 quarter left in the year. I’m just — maybe it’s a recalibration —
Jacinth Smiley: All mix, right, all mix driven. You think about the mix between even from a commodity standpoint and where markets are priced, it really depends on what that mix looks like? I mean you could have it a drag on the top line where you have really strong volume hitting your top line and just depending on where markets are, doesn’t necessarily fall through on your margin line.
Operator: There are no further questions at this time. I will turn the call back over to Jim Snee, CEO, for closing remarks.
Jim Snee : Yes. Thank you. 2023 has certainly been a challenging year, but we continue to make great progress to addressing the near-term challenges. Our continued investment into our brands, our disciplined financial strategy, our continued balanced approach across our business all position us very well for future growth. My sincere thanks to all the hard work being done by the Hormel team to set us up for future success. And I want to thank all of you for joining us this morning and hope that you all have a safe Labor Day weekend.
Operator: Ladies and gentlemen, this concludes your conference call for today. We thank you for joining, and you may now disconnect your lines. Thank you.
