Hershey Reports First-Quarter 2025 Financial Results

Core Insights - The Hershey Company reported a significant decline in net sales and earnings for the first quarter of 2025, with net sales decreasing by 13.8% to $2,805.4 million compared to the same period in 2024 [6][12][41] - The company is facing challenges due to heightened cost pressures and ongoing tariff negotiations, but maintains a strong balance sheet that allows for continued investment in strategic initiatives and acquisitions [2][3] Financial Performance - Consolidated net sales for Q1 2025 were $2,805.4 million, down 13.8% from $3,252.7 million in Q1 2024 [6][41] - Reported net income was $224.2 million, or $1.10 per diluted share, representing a decrease of 71.7% compared to $797.5 million, or $3.89 per diluted share, in the prior year [6][41] - Adjusted earnings per share for Q1 2025 were $2.09, down 31.9% from $3.07 in Q1 2024 [6][41] Segment Performance - North America Confectionery segment net sales decreased by 15.0% to $2,300.1 million, with organic, constant currency net sales down 15.2% [18][41] - North America Salty Snacks segment net sales increased by 1.0% to $277.8 million, driven by a volume increase of approximately 4 points [22][41] - International segment net sales decreased by 15.9% to $227.5 million, with organic, constant currency net sales down 7.9% [25][41] Cost and Margin Analysis - Reported gross margin for Q1 2025 was 33.7%, a decrease of 1,780 basis points from 51.5% in Q1 2024, primarily due to higher commodity and manufacturing costs [13][41] - Adjusted gross margin was 41.2%, down 370 basis points from the previous year [13][41] - Selling, marketing, and administrative expenses decreased by 9.6% compared to Q1 2024, reflecting reduced advertising and lower compensation costs [14][41] Outlook and Guidance - The company expects net sales growth of at least 2% for the full year 2025, with reported earnings per share projected to decline in the high-40% range and adjusted earnings per share expected to decline in the mid-30% range [4][5] - The impact of the Sour Strips acquisition is anticipated to contribute approximately 30 basis points to net sales growth for the full year 2025 [4]