In chicken, we have a differentiated model. We have the number one brand in chicken. We’ve talked often about the fact that our model doesn’t get the highest or lows of the commodity markets. This does not mean we’re not impacted. For example, we talked a lot about variable pricing models, we have those. And €“ but I would remind you that those pricing models have lags as well. As we started this year in chicken in particular, we had a good plan. We still like our chicken business, but there were a lot of moving parts in Q1. So what happened in Q1? Our volume was up 3% and our harvest pounds were up 15%. This is due to a mix shift from small bird bone-in to more of a boneless product, and it was part of our strategy. Our supply plan is dictated by our demand plan.
This is a core tenet of our business. We plan for a strong November and December. If you’ll remember, for fresh chicken, if you remember, we shorted fresh chicken in the last 3 years in a significant way, and we had a plan in place this holiday season to not have that happen again. November and December were softer than we expected or planned for in retail fresh chicken. This created excess in our retail fresh chicken. Because of sales didn’t materialize in retail fresh. This triggered a resale or movement of products. The resale price was much lower than modeled for the original sale. So to help you a little bit, I would say, just to dimensionalize this, that about two-thirds of our miss was market-driven and about third of the miss was related to labor, yield and spend, some of which was associated with the movement of product because of the miss on fresh chicken, the movement of product from one location to another impacted labor, yield and created incremental freight costs.
We also had some knock-on effects of building inventory as a result of this, inventory above our plan. And as a reminder, avian influenza impacted our pricing and volume on both cost and chicken leg quarters in the quarter. There was more chicken, beef and pork in the market than anticipated. So it sounds like a lot of excuses there. I get that. So what now what, so what are we doing? I’d tell you that we still have a great chicken business. We still have a good plan. We are cleaning up and have been cleaning up some issues from Q1 that I’ve talked about earlier. So as we think about from this day €“ or since Q1, we have to control the controllables. I would remind you that we are fully staffed, and we continue to invest in a better workplace experience through automation, etcetera.
We are growing our business, servicing our customers and becoming the most sought-after place to work and we will compete with the very best in the chicken space. So, let me pause and get a follow-up question and we will go from there.
Alexia Howard: Thank you for that. Just moving quickly to the Beef segment, you’ve given us a range of 2% to 4% on the operating margin side now. Prior to that, it was more open ended just below your long-term guidance. What has become clearer? What is more certain now about the outlook for this year? And what gives you the confidence that it will come in within that range and not below it? Thank you and I will pass it on.
