Hormel Foods warns of supply shortages on COVID-19 hit By Reuters

Hormel Foods warns of supply shortages on COVID-19 hit By


© Reuters. The company logo for Hormel Foods is displayed on a screen on the floor at the NYSE in New York

(Reuters) – Spam-maker Hormel Foods Corp (NYSE:) on Tuesday warned that it would have a hard time meeting high demand for certain products because of supply chain, staffing and production problems brought on by the COVID-19 pandemic.

Hormel also said it had to find alternate ways to increase production, including relying on co-manufacturing partners.

The surge in demand came just as coronavirus outbreaks forced the closure of some of the biggest U.S. meatpacking plants, threatening to cause massive shortages in the nation’s meat supply.

“The magnitude of additional recovery in the foodservice industry, the performance of the entire food supply chain and the state of the broader economy remain highly uncertain,” Chief Executive Officer Jim Snee said. [nPn1BmCJBa]

The company has had to reduce the number of employees working at a time in its plants with staggered shifts and expanded temperature screenings to prevent transmission of the virus.

The company estimates supply chain costs to be around $80 million to $100 million in fiscal 2020.

However, the Skippy peanut butter maker on Tuesday posted a better-than-expected profit for the third quarter, citing a pick-up in its business at restaurants.

Still, Snee added that though the foodservice business has seen a rebound, it was still below last year and expects the trend to continue into the fourth quarter.

Shares of the company were down 1%.

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