Hormel Foods Corp. posted a 3 percent drop in second-quarter net income as the maker of Spam and Hormel chili products endured high costs in its grocery segment, which hurt margins.

But the food maker raised the upper end of its guidance and says its brands will help it overcome high costs.

The company earned $77.9 million, or 57 cents a share, in the three months ended April 25, down from $80.4 million, or 59 cents a share.

The 2010 results include one-time charges worth 10 cents a share for a plant closing and the tax impact of new health care laws.

Revenue rose 7 percent to $1.7 billion.

According to Thomson Reuters, analysts expected income of 61 cents a share on revenue of $1.62 billion.