The Hershey Company Earnings Call Transcripts
Fiscal Year 2026
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Management outlined a disciplined growth strategy with increased investment in brands, innovation, and technology, aiming for balanced price and volume growth through 2027. Margin recovery, portfolio expansion in premium and salty snacks, and a unified operating model are key priorities.
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The meeting covered director elections, auditor ratification, and advisory approval of executive compensation. Strategic plans focus on next-generation snacking, supply chain modernization, and double-digit earnings growth. Key risks like cocoa price volatility were addressed with robust mitigation strategies.
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Confectionery faced increased competition but expects H2 momentum from innovation and tentpole events. Gross margins are set to rise, snacks core brands are strong, and guidance remains unchanged with favorable elasticities and robust retail execution.
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Q1 2026 net sales rose 10.6% year-over-year, with strong brand and innovation performance. Full-year guidance for organic net sales and adjusted EPS growth remains unchanged, as margin recovery and robust demand are expected to continue.
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Management outlined a strategy to lead next-generation snacking by expanding core confectionery, accelerating salty snack growth, and driving international expansion. Financial guidance targets 2%-4% organic revenue growth and 6%-8% EPS growth post-2027, supported by innovation, tech-enabled productivity, and a unified commercial model.
Fiscal Year 2025
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Strong Q4 momentum and robust 2026 guidance reflect double-digit EBIT growth across segments, margin recovery, and increased brand investment. Cocoa cost volatility and macro headwinds are managed with hedging and agile planning, while innovation and affordability drive growth.
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Net sales grew 4.4% in 2025, with strong Q4 momentum and market share gains in confectionery and salty snacks. 2026 guidance calls for 4%-5% sales growth, margin recovery, and increased investment, supported by the LesserEvil acquisition and robust innovation plans.
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Balanced growth and strong innovation offset a softer Halloween, with everyday and salty snacks driving double-digit gains. 2026 guidance targets 2%-4% revenue growth and potential EPS upside, while cocoa and elasticity remain key watchpoints.
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Q3 net sales rose 6.5% year-over-year, led by innovation and strong brand execution, but adjusted gross margin fell 850 basis points due to commodity inflation and tariffs. Full-year sales growth outlook was raised to 3%, with adjusted EPS expected to decline 36%-37%.
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Leadership transition is underway, with strong brand investment and innovation driving growth. Major price increases are set to recover margins in 2026, with elasticity and cost headwinds closely managed. Optimism remains for tariff relief and continued category momentum.
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Second quarter net sales surged 26% year-over-year, led by strong North America confectionery and salty snacks performance, but adjusted EPS declined 4.7% due to higher commodity costs and taxes. Full-year adjusted EPS is expected to fall 36-38% as tariffs and cocoa inflation persist.
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Executive compensation, innovation, and growth strategies were key topics, with all director nominees and proposals approved. The company is addressing regulatory, cost, and market challenges through transformation, M&A, and product innovation.
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Earnings for the first half are expected to decline 30% year-over-year, with tariff and cocoa inflation risks potentially impacting the back half by up to $100 million per quarter unmitigated. Market share is positive, innovation is strong, and mitigation actions are underway.
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Net sales declined 13.8% year-over-year due to prior year inventory build and currency headwinds, while salty snacks outperformed and new acquisitions were announced. Full-year net sales growth of at least 2% and mid-30% adjusted EPS decline are reaffirmed, with cocoa and tariff costs as key risks.
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Leadership highlighted strong long-term growth prospects in snacking, driven by portfolio diversification, innovation, and consumer-centric strategies. Despite near-term cocoa inflation pressures, transformation initiatives and disciplined investment are expected to support sustained growth.
Fiscal Year 2024
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Balanced growth targeted for 2026, with EPS recovery planned even if cocoa prices stay high. 2025 guidance is cautious due to elasticity and channel pressures, but innovation and sweets portfolio strength are expected to drive improvement.
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Q4 2024 net sales rose 8.7% with strong growth in salty snacks and international markets, but historically high cocoa prices are expected to pressure 2025 margins and earnings. Transformation programs delivered $143 million in savings, and 2025 net sales are guided to grow at least 2%.
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Top-line growth is expected to align with the long-term 2–4% algorithm in 2025, with pricing and elasticity trends similar to 2024. Cocoa-driven COGS inflation will be a major headwind, but productivity programs and fewer operational challenges are set to support performance.
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Q3 2024 saw net sales decline 1.4% and adjusted EPS fall 10% amid high cocoa prices and shifting consumer behavior. Full-year sales are now expected to be flat, with continued margin pressure, but innovation and operational investments support long-term growth.
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Q2 2024 was affected by lower retail inventory and Halloween timing, but the outlook for the second half is strong due to innovation, merchandising resets, and seasonal strength. A 6-7% price increase is being phased in to address cocoa inflation, with cost savings and productivity initiatives on track.
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Q2 2024 saw net sales decline 16.7% due to inventory and shipment timing, while salty snacks grew 6.4%. Full-year net sales outlook narrowed to 2%, with innovation and pricing actions expected to drive second-half and 2025 growth.