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Tyson Foods' (TSN) Retail Business Gains on Strong Demand

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Tyson Foods, Inc. TSN has been gaining from higher at-home consumption trends amid the pandemic. This well-known meat products company is witnessing strong demand conditions in its retail business channel. Moreover, the company has been gaining from higher demand for protein packed food offerings across key markets. Also, the company’s strong brand image and efforts to boost operational efficiency have been serving as growth catalysts.

Retail Channel Gains on Higher Demand

Tyson Foods’ retail business is witnessing favorable demand conditions owing to increased at-home consumption amid the pandemic. Markedly, strong retail sales served as a crucial upside for the company during second-quarter fiscal 2021. In the reported quarter, the company delivered growth across all segments in the retail channel. Notably, retail contributed $700 million to overall sales improvement during the first half and more than $260 million in the second quarter.

Strong Portfolio of Protein Products

Tyson Foods boasts a rich portfolio of protein packed brands that are growing rapidly across the globe. For the Beef segment, the USDA projects domestic production to increase nearly 3% in fiscal 2021. For Pork, domestic production growth is likely to be up by less than 1%, per the USDA. To boost growth in the Prepared Foods segment, the company is focusing on effectively responding to consumers changing preferences. The company is also engaged in facility expansions to boost production capacity.

Additionally, Tyson Foods has been steadily expanding fresh prepared foods offering, owing to consumers’ rising demand for natural fresh meat offerings without any added hormones or antibiotics. Moreover, Tyson Foods is exploring growth opportunities in the alternative meat products space, which mainly includes plant-derived protein.

Final Thoughts

We note that Tyson Foods performance is being adversely impacted by pandemic-induced production inefficiencies. This affected the company’s sales volumes during the second quarter of fiscal 2021. Further, severe winter weather during the quarter affected volumes negatively. Moreover, foodservice volumes are yet to pick up pace. Apart from this, the company grapples with rising operating costs associated with the pandemic.

Nevertheless, the company is resorting to several operational and supply-chain efficiency programs to place itself better for the long run. These upsides together with Tyson Foods’ robust brand presence, geographical reach as well as its efforts to cater to the evolving global demand keep it well placed for growth in the forthcoming periods.

Shares of this Zacks Rank #3 (Hold) stock have gained 17.1% in the past three months compared with the industry’s rise of 6.7%.

Looking for Food Stocks? Check These

Pilgrims Pride Corporation PPC, with a Zacks Rank #2 (Buy), has a long-term earnings growth rate of 27%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Nomad Foods Limited NOMD with a Zacks Rank #2, has a trailing four-quarter earnings surprise of 10.3%, on average.

United Natural Foods, Inc. UNFI, also with a Zacks Rank #2, has a trailing four-quarter earnings surprise of 13.6%, on average.

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