How COVID-19 could impact your Memorial Day BBQ

Hearth, Patio & Barbecue Association Director Emily McGee joins Yahoo Finance’s Alexis Christoforous and Brian Sozzi to discuss how the summer barbecue season will pan out this summer.

Video Transcript

BRIAN SOZZI: Welcome back to "The First Trade." Let's go to Yahoo Finance trending ticker. That is Hormel after the company fell short of expectations on earnings, but sales above-- came in above forecasts. Ines Ferre is closely watching that company. Ines, how did Spam do?

INES FERRE: Actually, really well. Spam did very well, especially internationally as well. But let's take a look at what you were just talking about. With net sales up 3% at $2.4 billion, that was record net sales. Organic net sales up 6%. The company's operating margin of 12.1%, that was down, a little squeeze there compared to 13.3% last year. Its earnings per share came in at $0.42, down 19%.

So just taking a look at the categories here. Grocery products, that profit was up 22% year-over-year at $127.8 million, with double-digit growth from products such as Spam, Skippy, and also microwave meals. Then looking at refrigerated foods, volume was flat there. Net sales were down with a segment profit down 17% there.

Jennie-O Turkey Stores saw strong demand during the outbreak. Its segment profit increased 54%. And international, as I mentioned, strong global demand for Spam luncheon meat and other branded exports, which overcame softer food service sales.

Now, just taking a look at some of the costs which may have impacted its bottom line. In the second quarter, the company absorbed about $20 million in incremental supply chain costs, employee bonuses, and safety measures for facilities. And the company is expecting to absorb another $60 to $80 million in the second half of the year. Right now the stock is down more than 4%. Year-to-date, the stock is up more than 1% year-to-date. But today its seeing a little bit of pressure. Brian.

BRIAN SOZZI: All right, thanks, Ines. It brought in $2.65 billion in sales last year, according to statistics.com, that is the barbecue industry. But with other summertime traditions like baseball, trips to the beach, and blockbuster movies on hold due to the pandemic, does that mean the barbecue industry will meet the same fate?

To break that down and to discuss what comes next is Emily McGee of the Hearth, Patio & Barbecue Association. Emily, good to see you this morning. I am a big barbecue fan, but I don't know if I'm going to go out there and hold these big parties and barbecue because of social distancing. What are you hearing from people in your industry?

EMILY MCGEE: What we're hearing is we might not have the big parties where you gather all the neighbors with you. But you are going to see people out there grilling on their own, and experimenting, and trying new foods on the grill. We're-- we're seeing a increase, according to one of a-- online survey we did on social media, 50% of grilling enthusiasts are actually grilling more now that they're home than they do in a normal year. And we expect to see that continue.

ALEXIS CHRISTOFOROUS: What about what they are grilling, is it-- is it beef? Is it chicken? Is it pork? Because we know we've been hearing a lot about a possible meat shortage in this country because there's so many meat company plants being affected with employees who were hurt by COVID-19. What are people out there grilling?

EMILY MCGEE: Well, the beauty of the grill is that you can grill anything on it. And last night, I grilled some steaks and asparagus. But we have a website whyIgrill.com which has recipes for anything you can imagine.

It has everything with meat, or vegetables, or fish, or anything. So if you're finding that you're in a part of the country that is lacking certain types of meat, there may be other meats you can try, or you can grill other things. So we just hope people still get out there and experiment.

BRIAN SOZZI: Emily, Alexis and I, we didn't get the invite to that party yesterday.

EMILY MCGEE: Well, there is going to be a big party on Saturday. We're doing a national Back to Barbecue Day, a virtual get together. Everybody should get out there on Saturday and grill to celebrate the official start of grilling season.

BRIAN SOZZI: Is that what we're looking at this summer, the virtual barbecue?

EMILY MCGEE: I think so. I think we're seeing it in neighborhoods where you grill and kind of wave at your neighbors across the fence as they're grilling as well. And that's the way we are socializing these days. And it's fine because you're out there with your family and still able to enjoy the delicious barbecued food.

ALEXIS CHRISTOFOROUS: What about the cost to refill a propane tank, is that going to go up now because we're seeing more and more people choosing to-- to barbecue?

EMILY MCGEE: We haven't seen any indication that there's any issue with the supply there. So I-- I don't expect to see those prices go up. We haven't seen it anywhere that I've noticed.

BRIAN SOZZI: Are folks buying a new barbecue? I've been visiting my local Home Depot-- Home Depot and Lowe's on the weekend. I still see a lot of barbecue inventory out there. Are you seeing those-- those units move? The bottom line is we are in a severe recession.

EMILY MCGEE: We don't have official numbers on how many grills are being sold, but we are hearing anecdotally from our members that they're actually selling a lot of barbecues. And people are staying at home because they have to. And now that the weather is getting nicer, they're more interested to go outside and grill outside. So people, you know, about a third of the-- of homeowners plan to buy a grill this year, according to a survey we did last year.

And when we grill the-- when we surveyed those grilling enthusiasts, 30% either had already purchased it or still planned to buy it. You can buy grills from your local retailers. You can buy them from your big-box stores. We recommend that you check out what's available online, because a lot of our members have been experimenting with virtual retailing, and selling online, and social media, and there are a lot of deals out there to get good grills.

ALEXIS CHRISTOFOROUS: Are you seeing a lot of first-time barbecuers, I guess we can call them, you know, people who may have thought, you know, didn't think much of barbecuing before, but now because they're stuck at home more, they're looking for different and better ways to prepare their food?

EMILY MCGEE: Again, we don't have the exact stats on that. But we are seeing enough anecdotal stuff that there are people out there that are trying it for the first time, or they're trying new foods, or they're trying to cook their comfort foods on the grill. And again, there are a lot of resources out there for people who need recipes or ideas. And once this all wraps up, it'll be interesting to see what the numbers show about how many first-time grillers got out there this year.

BRIAN SOZZI: You know, what are some of your-- the biggest concerns you're hearing from the folks you talk to in the industry, given the situation, we are, in fact, in?

EMILY MCGEE: Well, the initial concern right early on was that there were so many unknowns about being able to keep stores open and keep the products available for the customers to buy. Fortunately, many of the independent retailers out there are actually also hearth shops, and they-- many of them were designated essential businesses as they are a service as well as a heating with the fireplaces. So there's a lot of-- that was the first concern, were people going to be able to be open and-- and sell their products?

But as time's going on, we're finding that the shops are open. People are buying. And really, people have been, I think, almost pleasantly surprised with how well things have gone this spring.

BRIAN SOZZI: All right, let's leave it there. Emily McGee, Hearth, Patio & Barbecue Association Director, a true grill master. Enjoy your virtual barbecue this summer.

EMILY MCGEE: Yeah. Thank you so much. You too.

BRIAN SOZZI: All right, appreciate it.