Is Tyson Now the Lazarus of the Meat Industry?

Or is there a more logical explanation?


We’ll start up the “Doubting Thomas” Machine in a second, but let’s first acknowledge (and stick with the biblical analogy) that Tyson Foods Inc. seems to have rolled away the metaphorical stone at the mouth of the metaphorical tomb in which they seemed to be ensconced after last year's dismal earnings reports.


2009 was a historically tough year for a company that has been around for more than a hundred of them since their founding in 1896. The Arkansas-based food giant reported a $215 million loss in their operating income at the close of last year’s business with profit margins on their beef business alone running at a loss of 3.2%


But, as The Times reported last week, it looks like Tyson is bouncing back.


Big time.


This year’s final quarter earnings almost look like that of a different company altogether with a reported operating income of roughly $1.5 billion dollars, a $1.77 billion turnaround in one year.


That’s some year.


But, returning to our Lazarus metaphor, the miraculous mending of Tyson’s finances might be not so divine as it is an actuarial inevitability brought about by external market forces.


One salient piece of info from Tyson’s 2010 Q4 earnings report (we read them so you don’t have to) is the performance of the company’s beef business. As we said earlier, that same sector of their revenue stream accounted for a loss of nearly $346 million during Q4 2009. 


In Q4 2010 beef accounted for $542 million in profit for Tyson, a 4.6% gain in profits on their margins.


And if you follow us here at “The Biz,” you know that this is not too surprising (remember?) as beef prices are spiking like a 19^th century fever patient.


So is Tyson really a company that has been rewarded with a second lease on life for its good values and strong belief in the American dream?


Or is it a company that’s getting a profit vacation from an unnatural bubble in beef prices brought about by grain shortages in lands far, far away?


We hesitate to make a call either way as we’re merely humble editors of a blog and not analysts at a commodities brokerage, but we think that Tyson is worth a look for investors.


But make sure it’s a long, lingering one.

"Wal-Mart: America's Largest Locavore Grocer"... Wait... What?

According to a piece today on Reuters, Wal-Mart Stores Inc. has announced plans to double its commitment to sourcing its produce from smaller farms and ones more local to their retail locations.

Yes, that Wal-Mart...

"Welcome to Wal-Mart, I'm the Backbone
 of America"

The company claims that this change to their produce inventory will constitute a $1 billion increase to their sales of foods from "emerging markets."

By utilizing their enormous presence in the American retail market to... err... market, and sell all this locally-grown produce, the big-box behemoth claims that they can carve out 9% of market share for locally-grown 'fruits and veggies.'

That's NINE PERCENT of the ENTIRE U.S. produce market.

And by doing this, the company estimates that they can create a 10-15% rise in annual income for their new vendors, independent and other small farmers.

So... let's tick these off on our virtual fingers, shall we? Better quality produce... from local farms... that will reach a staggering percentage of possible consumers and potentially revolutionize the toxic American diet... while helping farmers?

Wow.

There is so much "do-goodery" represented on our digital fingertips that our avatar is blushing.*

And it's all due to the good people at... Wal-Mart.

We know, it feels weird.

So, why is the perceived Deathstar of Small Businesses making what seems to be an altruistic economic decision?

Why is the least-trusted corporation on the globe spending capital to research and develop a plan that provides better food for more people while making more money for the most honored of nationalistic, hardworking archetypes; the independent American Farmer?

And what does it say about our culture that the descendants of "Darth Walton" are now extending their profit minded tentacles, and offering the consuming public a freshly-picked, shiny, organic, small-batch nectarine... at an affordable price?

Well, maybe it's time to consider the option that this new approach is also good business.

And we here "The Biz" don't mean that as a slight to Wal-Mart. Any company that makes more than $405 billion in revenue annually, as the company made last year (a 7% increase from 2008), and can attribute more than half of that revenue domestically to grocery sales (51%), can continue to go about business as usual without making any significant changes to their business model.

Instead of going out to small, family farms and becoming a market conduit, bringing a huge portion of the American populace a higher level of nutritious produce, Wal-Mart could have continued to shell for poor quality, mass-produced swill that they buy at wholesale discounts from faceless "AgroGiants,"and still made hundreds of billions of dollars.

But, like it or not (and frankly, why would you not?), Wal-Mart has made this five-year commitment and it's very, very impressive.

It almost makes you hope they can make it work for their bottom line...

Hey, we said "almost."

* - (ed note- we don't actaully have an avatar... yet)