Key insights
- Hershey beat quarterly estimates due to price increases and salty snack demand, offsetting rising costs. Confectionary volumes dipped, but overall organic price rose 10%. The company reiterated its annual targets, anticipating 4-5% net sales growth and a 30-35% increase in adjusted EPS. Macro headwinds and food stamp changes are being factored into the forecast. The results suggest resilience in consumer staples despite inflationary pressures and changing consumer preferences.
April 30 (Reuters) - Hershey on Thursday beat Wall Street expectations for quarterly revenue and profit as higher prices and demand for its chocolates and snacks helped offset rising commodities costs.
Like other snack makers, Hershey has been investing in marketing and product innovation focused on cleaner ingredients to win over health-conscious consumers amid the U.S. administration's push to "Make America Healthy Again" and the growing adoption of appetite-suppressing GLP-1 drugs.
Hershey's earnings for the quarter ended March 29 seemed to reflect the impact of this shift. Organic volumes in the North America salty snacks segment rose 5%.
Last year, the company acquired the LesserEvil brand, known for its popcorn and snacks without seed oils, which boosted growth in its North America salty snacks segment by about 20 percentage points for the reported quarter.
However, volumes for Hershey's North America confectionary segment saw a 4% dip. Overall organic price was up 10%, following a 6% rise in the preceding three-month period.
Consumers in lower-income households have been carefully evaluating their budgets as higher costs of fuel and uncertainty from the war in Iran pressure spending.
Like other chocolate makers, Hershey has also hiked prices for its confectionary products over the past few years to offset surging cocoa costs. While cocoa prices have retreated from their 2025 peak, the Middle East conflict has raised concerns of fresh spikes as farmers in key cocoa-producing countries struggle to secure fertilizers.
For the first quarter, Hershey's overall adjusted gross margin fell 80 basis points from a year ago, hurt by higher commodity and tariff-related costs.
Still, the Reese's parent reiterated its annual targets of 4% to 5% net sales growth and 30% to 35% increase in adjusted earnings per share as price hikes cushioned margins.
The forecast incorporates prudent assumptions on macro headwinds such as changes to the food stamps program, increased adoption of healthier snacking and financial strain on consumers as a result of the conflict in the Middle East, CEO Steve Voskuil said.
The company reported quarterly net sales of $3.10 billion, compared with estimates of $3.03 billion, according to data compiled by LSEG.
Its adjusted earnings per share came in at $2.35, beating estimates of $2.04.
Meanwhile, rival Mondelez International, which makes Toblerone, also topped quarterly estimates earlier this week helped by higher prices.
(Reporting by Juveria Tabassum in Bengaluru; Editing by Diti Pujara)