Hershey Reports Second-Quarter 2025 Financial Results

Core Insights - The Hershey Company reported strong second-quarter results for 2025, with net sales reaching $2,614.7 million, a 26.0% increase compared to the same period in 2024, driven by effective brand investments and innovation [7][13] - The company updated its full-year earnings outlook, projecting a decrease in reported earnings per share by approximately 50% and adjusted earnings per share by 36% to 38% due to tariff expenses and commodity cost mitigation strategies [5][4] - Hershey's strategic pricing and productivity enhancements are aimed at mitigating cocoa inflation and maintaining balanced growth [2][4] Financial Performance - Consolidated net sales increased by 26.0% to $2,614.7 million, with organic, constant currency net sales up 26.3% [7][13] - Reported net income was $62.7 million, or $0.31 per share-diluted, reflecting a 65.2% decrease year-over-year [7][6] - Adjusted earnings per share-diluted decreased by 4.7% to $1.21 [7][6] Segment Performance - North America Confectionery segment net sales rose 32.0% to $2,085.5 million, with volume growth driven by inventory adjustments and seasonal timing [20][22] - North America Salty Snacks segment net sales increased by 8.8% to $315.5 million, supported by reduced trade promotions [23][26] - International segment net sales grew by 4.4% to $213.7 million, with organic, constant currency net sales up 10.0% [27][28] Cost and Margin Analysis - Reported gross margin decreased to 30.5% from 40.2% in the prior year, primarily due to higher commodity costs and derivative mark-to-market losses [14][34] - Adjusted gross margin was 38.1%, down from 43.2% year-over-year [34][14] - Selling, marketing, and administrative expenses increased by 11.5%, driven by higher advertising costs [15][29] Tax and Interest Expenses - The reported effective tax rate was 57.9%, an increase of 3,150 basis points compared to the previous year, influenced by foreign rate differentials [18][34] - Interest expense was approximately $200 million, reflecting higher leverage and interest rates [8][34] Future Outlook - The company anticipates tariff expenses of approximately $170 to $180 million for the full year, impacting its financial outlook [8][5] - Hershey's guidance does not account for the potential effects of the proposed acquisition of LesserEvil [4][5]