The Hershey Company ((HSY)) has held its Q3 earnings call. Read on for the main highlights of the call.
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The latest earnings call from The Hershey Company revealed a mixed sentiment among investors and analysts. While the company celebrated significant growth in its salty snacks segment and positive contributions from recent innovations, challenges such as disappointing Halloween sales and persistent cocoa cost pressures tempered the overall optimism.
Salty Snacks Growth
The Hershey Company’s salty snacks segment experienced a remarkable 14% year-over-year increase in consumption. This growth was primarily driven by the strong performance of brands like SkinnyPop and Dot’s, which not only gained market share but also demonstrated robust growth, contributing positively to the company’s overall performance.
Positive Innovation Impact
Innovation continues to be a key driver for The Hershey Company, with the REESE’S Oreo launch significantly boosting category growth and market engagement. The company has ambitious plans for a strong innovation pipeline in the coming years, particularly in 2026 and 2027, which is expected to sustain its competitive edge.
Everyday CMG Business Double-Digit Growth
The everyday CMG business segment reported double-digit growth over the past four weeks, reflecting strong consumer demand and an effective pricing strategy. This growth underscores the company’s ability to adapt to market conditions and meet consumer needs effectively.
Disappointing Halloween Sales
Despite the positive trends in other segments, Halloween sales fell short of expectations. The company noted a heavy reliance on the last week of sales to meet projections, a challenge exacerbated by the holiday falling on a Friday. This shortfall highlights the volatility and unpredictability of seasonal sales.
International Segment Loss
The international segment faced difficulties, reporting a loss due to higher cocoa costs and competitive pricing pressures. These challenges are expected to persist until cocoa prices become deflationary, impacting the segment’s profitability.
Cocoa Cost Challenges
Cocoa costs remain a significant concern for The Hershey Company, with prices still 70% higher than in 2023. This has put pressure on margins, and while there has been some recent moderation, inflationary pressures are expected to continue into 2026, posing ongoing challenges for the company.
Forward-Looking Guidance
Looking ahead, The Hershey Company provided guidance for 2026, focusing on balanced growth and long-term investment. The company anticipates a non-algorithm year for both top and bottom lines, with potential for above-algorithm EPS growth, contingent on factors like elasticity and cocoa costs. Despite challenges, Hershey is committed to rebuilding margins gradually while maintaining its revenue growth algorithm of 2% to 4%. The company plans to leverage strong everyday confectionery growth and a robust innovation pipeline, with strategic pricing and consumer insights to ensure competitiveness.
In conclusion, The Hershey Company’s earnings call reflected a mixed sentiment, with notable successes in salty snacks and innovation tempered by challenges in seasonal sales and cocoa costs. The company’s forward-looking guidance remains cautiously optimistic, emphasizing strategic investments and market positioning for sustained growth.