Tyson Foods Inc. says it's dealing with shortages of some of its frozen chicken products. The Springdale-based company says it will be fiscal year 2015 before its frozen chicken operations will be at full capacity.
Tyson Foods Inc. of Springdale seems to be having issues with getting some of its frozen chicken products to the store for purchase.
That’s according to a note, dated July 24, on one of the frozen food aisles of a Kroger store in Conway. The letter reads:
“Dear Kroger Shopper,
Kroger is currently experiencing major shortages from Tyson foods [sic]. We anticipate this shortage will continue for several weeks. We are working closely with Tyson to increase the amount of product available in the weeks ahead.
This shortage effects [sic] Tyson brand frozen chicken and Kroger’s P$$T brand frozen chicken.
We greatly apologize for this inconvenience.
The Kroger Company
Cincinnati, Ohio”
A Tyson spokesman confirmed the shortage to Arkansas Business in an email Friday morning.
“Yes, we have had a temporary disruption in supply on some frozen chicken products, but are working to get them back on the shelves quickly,” the spokesman said.
The shortage is the result of what the spokesman called “operational issues” at two of its facilities.
“One facility is back to full production and the other is now making limited amounts of product,” he said. “We’re installing additional equipment at this facility and working to get it back to full production.”
The spokesman would not go into specifics on what stores or regions were affected by the shortage, in addition to products.
Tyson officials addressed the issues in an earnings call July 28.
Donnie Smith, president and CEO, acknowledged that pricing was down one percent in the third quarter due to “loss of volume in our high-margin value-added products.”
“In February of this year, we experienced a fire at one of our fully cooked processing plants. Fortunately, no one was injured. But the damage to the infrastructure was more serious than we had originally thought. And our ability to supply products suffered. The mechanical repairs are now complete and the plant is back to producing normal volumes.”
Smith also said another plant “experienced a series of operational issues” which also impacted supply.
“New equipment has been ordered and is being installed and we expect to be back at full production volume in the early weeks of our fiscal Q1 of 2015. On our Q2 call, you’ll remember that I mentioned that we’re completely out of fully cooked capacity in our chicken business, which is why we weren’t able to move production to other facilities following either event. So we’ve endured for long sizable production shortfalls in one of our highest revenue, most profitable business during a time when high-priced beef and pork accelerated the demand of chicken.”
To read the entire earnings call, click here.
Smith said the plant issues would cost the company between 1.5 percent and 2 percent in return on sales in the third and fourth quarters. However, Smith said the company will be at “full productive capability” in fiscal year 2015 and the chicken sales are expected to recover and deliver a 10 percent return.
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