Jim Snee
Chairman, President & Chief Executive Officer at Hormel Foods
Thank you, David. Good morning, everyone. Fiscal 2022 was a return to growth for our business, as we delivered record sales and double-digit earnings growth compared to last year. Fiscal 2022 mark the third consecutive year of record sales and the second most profitable year in our company's 131 year history. In addition to achieving strong year-over-year growth, our team made considerable progress on our six strategic priorities.
First, we continued our efforts to protect and grow our core brands. Sales in our retail channel increased 7% in fiscal 2022, led by brands such as SPAM, SKIPPY, Hormel Natural Choice, Dinty Moore, Hormel Square Table entree and Mary Kitchen. Of note, the SPAM family of products achieved its eighth consecutive year of record growth. Second, we made progress amplifying our presence in snacking and entertaining. We delivered excellent growth on the Columbus and Hormel Gatherings brand and we have successfully integrated the Planters business. We have a powerhouse of brands with the goal of becoming the leading solutions provider in the snacking and entertainment space.
Third, we saw growth from our ethnic and food forward portfolios. Both our MegaMex joint venture and Applegate business achieved sales milestones this fiscal year, driving growth behind the WHOLLY, Herdez and Applegate brands respectively. These businesses are well positioned in the marketplace due to their strong and reputable brands, on-trend innovation and loyal consumer bases. Fourth, we continue to expand our leadership position in food service. Sales in the foodservice channel grew 20% compared to last year, as operators again turn to our items to help solve for labor pressures and to diversify menu offerings.
We drove excellent growth in this critically important channel, highlighted by brands such as Bacon 1, Austin Blues, Hormel Fire Braised and Cafe H. Our foodservice portfolio and direct selling organization remain key differentiators and growth catalysts for the company. Fifth, we invested into our international business, as we look to aggressively develop our global presence.
In fiscal 2022, we commissioned a state-of-the-art innovation center, supporting the Asia Pacific region and approved another capacity investment to support our growth in China. Our international business is expected to be a significant growth driver for the company. Finally, we continue to transform our company. We made noteworthy progress on our transformational efforts at Jennie-O Turkey Store and laid the groundwork for the next step in our evolution as a global branded food company, our go-forward initiative.
We also made considerable progress on our 20 By 30 Challenge. Some of the year's highlights included, matching 100% of our domestic energy use in fiscal 2022 with renewable sourcing; remaining on track to have an approved science-based target for the reduction of greenhouse gas emissions by 2023; becoming a major sponsor of up to 50,000 acre regenerative agriculture pilot project in Central and Southeast Minessota; announcing our commitment to create a food secure community program in Austin, Minnesota, with the additional goal of sharing the blueprint and findings globally. We are making a difference, thanks to the incredible work and dedication of our team members, partners and suppliers.
Our team showed tremendous result to deliver growth in fiscal 2022. The team overcame broad based inflationary pressures, supply chain disruptions, the impacts from highly pathogenic avian influenza or HPAI and numerous headwinds in our international business. I want to express my sincere gratitude to the team for their dedication, hard work and for demonstrating our results matter mentality again this past year.
In the fourth quarter, our team delivered diluted earnings per share comparable with record results last year and last year included an additional week of sales. These results further demonstrate that our brands remain healthy and the strategic investments we have made are enabling growth. We achieved another quarter of organic sales growth, led by our center store grocery portfolio and solid performances from our foodservice businesses. Segment profit growth was due to the Jennie-O Turkey Store segment as the team again managed Turkey supply effectively and maximized operational performance.
We also made progress across our supply chain to increase production capabilities and restore inventories on key product lines. Fill rates for retail, deli and foodservice items all improved compared to last year and the third quarter. As we announced in August, we recently began transitioning our business to a new strategic operating model. As of October 31st, we have moved to three operating segments, retail, foodservice and international.
Over the last month, we have been working to create a unified retail organization with scale, experience, expertise and passion to grow our almost $8 billion portfolio of brands. We are approaching customers differently, bringing together subject matter experts from across our businesses to find growth opportunities and execute strategies in the marketplace.
We are leading with a more food-forward mentality, thinking and acting differently in the ways we position our brands with consumers. This has created new opportunities that were not easily executed in our old model and we are working with a newly created brand fuel team to ignite the potential of our products in store and on shelf.
And these early successes are not limited to our retail team. Our combined foodservice team will further leverage the scale of planters in the convenience store channel, while assuming full control of the company's foodservice Turkey business, including the Jennie-O brand. Though we are only in the initial stages of the implementation, we are receiving positive responses from our customers and operators. Our immediate focus is to accelerate the execution of our six strategic priorities, while continuing to meet the needs of our customers, consumers and operators.
Specific to the first quarter, our teams will be working to adopt the new organizational design, management structures and accountabilities. The teams will be working to continue the work to integrate Jennie-O Turkey Store into the company's one supply chain and new operating segment. And our teams will be working to stand up the brand fuel Center of Excellence, which will house enterprise wide, brand management expertise, e-commerce capabilities, insights-led innovation and analytical support to better enable data driven decisions.
Earnings will be reported under this structure beginning with the release of fiscal 2023 first quarter results in early March. We will be supplying recast financial information for fiscal years 2021 and 2022 in February 2023. The deliberate and thoughtful steps we have taken thus far are all about better aligning our structure with our proven strategy to create the Hormel Foods of the future. We are excited for the additional collaboration, capabilities and value we will realize from this transition and remain confident in our ability to drive long-term sustainable growth.
Turning to our outlook, we expect to grow both sales and earnings in fiscal 2023. We enter fiscal 2023 well positioned for the current macroeconomic climate and expect top line growth from all three of our new segments; retail, foodservice and international.
In retail, we expect demand for our center store grocery business to remain strong, as consumers continue to seek products and brands that offer high value, versatility and convenience. We expect growth from Planters and the rest of our snacking and entertaining businesses, including the Columbus and Gatherings brands.
Planters will be rolling out meaningful innovation throughout the year to complement and expand on the new flavor varieties and packaging introduced in fiscal 2022. We expect to benefit from the investments we have made in additional Black Label bacon and Hormel Pepperoni capacity and are excited for the new SPAM capacity to be operational in the first half of the year.
And lastly, we expect a recovery in turkey volumes in the back half of the year, allowing our teams to continue to create a demand oriented and optimized turkey portfolio. This is heavily dependent on any future impacts to the supply chain from HPAI. We expect that the pricing actions taken over the past few quarters should result in a benefit to net sales in fiscal 2023. However, we have also accounted for additional impacts from elasticities as these new pricing actions are adopted in the marketplace.
To help mitigate risk to our retail volumes, we plan to increase advertising and brand investment, make further progress on our efforts to continue to improve fill rates and return to full assortments across our leading platforms. We plan to deliver innovation across the portfolio. We'll leverage the capabilities of go forward, which include our well-established revenue growth management and digital experience teams, our combined direct selling organization and our newly created Brand Fuel team.
In Foodservice, we are expecting another year of growth from our solutions based portfolio and direct selling team. We enter the year from a position of strength after two consecutive years of robust growth during the industry recovery. The consistent inroads our teams have made overtime, including during previous economic slowdowns to diversify our presence in emerging and non-commercial channels will help us navigate through future market volatility and uncertainty. Additionally, the team plans to leverage the Planters and Jennie-O brands to make further gains in the convenience and K-12 channels respectively.
Our international business had a challenging year in 2022, but we expect a strong return to growth in fiscal 2023. Demand for our products globally is robust and our production capabilities and inventory levels are healthy to support this demand. We believe that many of the export challenges we experienced this past year will gradually subside.
Like many, we're currently monitoring the situation in China. We are actively engaged with our in-country management team and are prioritizing the health, safety and well-being of our team members. This team has been resilient in the face of numerous challenges and will continue to deliver growth with balance between retail and foodservice.
From an overall bottom line perspective, we anticipate earnings growth to be driven by our foodservice and international segments and improvements across the supply chain. We expect to operate in a volatile, complex and high cost environment again in fiscal 2023, which is why we are increasingly focused on reducing costs and inefficiencies as part of our One Supply Chain initiative.
We have a strong track record of consistently capturing approximately $75 million per year of supply chain savings through our continuous improvement programs. Though these efforts continued over the last three years, the benefits have been masked by pandemic-related impacts, labor shortages, industry-wide supply chain disruption and most recently broad-based inflation. We will continue to identify and capture cost savings opportunities, find the efficiencies and drive unnecessary costs out of our system.
We fully expect that overtime, these actions, in addition to the benefits of broader market stabilization will result in more normalized operating margins for our business. Taking all of these factors into account, we expect full year net sales of $12.6 billion to $12.9 billion and diluted earnings per share of $1.83 to $1.93 per share. We have continued to benefit from our balanced business model, which is not heavily dependent on any one channel, protein, input or product category.
We also have a dedicated, well respected, experienced and stable management team that has again proven their ability to navigate and grow our business in volatile market conditions. Our long-term strategy to meet consumers where they want to eat with a broad portfolio of trusted brands and products will continue to be a key differentiator for our business, helping to drive growth for our customers and operators.
At this time, I will turn the call over to Jacinth Smiley, to discuss more detailed financial information and provide more color on key drivers to the fiscal 2023 outlook.