Hershey cuts yearly guidance, profit after steep 17% drop in sales

Core Insights - Hershey has reduced its yearly profit and sales guidance following a 17% decline in second-quarter sales, reflecting a broader trend of consumer pullback amid persistent inflation [1][2] - The company's stock initially dropped 4.5% but later rebounded by 5% [1] - Hershey's market capitalization stands at $38.83 billion, and it has historically maintained or grown its market share during economic downturns [1] Financial Performance - Second-quarter net sales decreased to $2.07 billion, falling short of analysts' expectations of $2.31 billion [2] - North America segment sales, which typically account for 80% of revenue, fell to $1.58 billion from $1.99 billion year-over-year [2] - Adjusted earnings per share dropped to $1.27, a 36.8% decline from the previous year, and below the expected $1.43 [2] - Organic volume saw an 18% decrease, while gross margin fell to 40.2%, down from 45.5% the previous year [2] Guidance and Market Trends - The company now anticipates a sales growth of 2%, revised down from a previous estimate of 2% to 3% [3] - Adjusted earnings per share are expected to experience a slight decline, contrasting with earlier expectations of no change [3] - CEO Michele Buck noted the impact of cautious consumer spending but highlighted growth in the confection category and momentum in the Salty Snacks portfolio [3] Segment Performance - The North America Salty Snacks segment reported net sales of $289.9 million, a 6.4% increase from the previous year, attributed to volume growth [4] - Salty snack segment income rose to $52.2 million, up 19.2% year-over-year [4] - Conversely, the North America Confectionery segment experienced a 20.7% decline in net sales, with income down 29.3% from the same period last year, totaling $464.5 million [4]