Core Insights - Hershey's candy sales are facing challenges despite the holiday season being traditionally profitable, with a noted slow start in Halloween sales attributed to the timing of the holiday [3][4] - The company is shifting focus to enhance consumer insights and digital marketing efforts, aiming to refine product offerings and pricing strategies year-round [4] - Hershey's strongest growth is now coming from its salty and savory snacks segment, indicating a shift in consumer preferences [6][7] Company Strategy - Hershey plans to invest in consumer insights to improve product mix, pricing, and packaging beyond just holiday seasons [4] - The company is enhancing digital marketing initiatives to drive growth and support creative collaborations, such as the Reese's Oreo partnership [4] Market Performance - Hershey reported a 5.6% year-over-year sales growth in its North America Confectionery segment for Q3 2025 [5] - The global candy market is valued at approximately $73.4 billion in 2025, with an expected annual growth rate of 4.6% through 2030, reaching $97.6 billion [7]

Financial Data and Key Metrics Changes - The company is experiencing balanced growth across its portfolio, with a long-term revenue growth algorithm of 2% to 4% expected to be maintained [8][19] - Cocoa costs have moderated significantly, although the company still anticipates year-over-year inflation [7][41] - The company has slightly lowered its tariff estimate, contributing to a more favorable outlook for earnings recovery over time [7][41] Business Line Data and Key Metrics Changes - The everyday CMG business has shown double-digit growth in the last four weeks, indicating strong performance in this segment [15][16] - The core business achieved close to 5% growth in Q3, excluding the impact of new innovations like Reese's Oreo [32] Market Data and Key Metrics Changes - The company noted that Halloween sales have been disappointing, with a slow start attributed to warm weather and consumer behavior [23][24] - The convenience store channel is performing well, with CMG growth at over 6%, indicating a healthy market presence [76] Company Strategy and Development Direction - The company is focused on long-term growth while rebuilding margins, emphasizing the importance of investing in brands and innovation [8][41] - There is a robust pipeline of innovation planned for 2026 and 2027, with a balance between core business growth and new product introductions [32][33] Management's Comments on Operating Environment and Future Outlook - Management acknowledges that the consumer market is challenging but believes the category remains resilient [84][85] - The company is optimistic about cocoa costs moderating and potential tariff relief, although it remains cautious about the overall economic environment [41][42] Other Important Information - The company is actively analyzing consumer insights to improve product offerings and marketing strategies for future seasons [24][25] - The tax rate has been impacted by several factors, including adjustments in reserves and procurement strategies, with further guidance expected in future calls [105][106] Q&A Session Summary Question: Insights on 2026 expectations and EPS growth - Management discussed the balanced growth and the importance of defining success for 2026, focusing on category growth and margin recovery [8][19] Question: Elasticity and pricing expectations - Management indicated that elasticity is a significant factor in planning for next year, with current expectations being cautiously optimistic [10][11] Question: Halloween sales performance - Management acknowledged a slow start for Halloween but emphasized the importance of consumer insights for future improvements [23][24] Question: Cocoa costs and pricing strategy - Management noted that cocoa costs are still significantly higher than previous years, and pricing strategies will be carefully managed [27][51] Question: Innovation pipeline for 2026 - Management highlighted the importance of innovation, particularly with successful products like Reese's Oreo, and a strong pipeline for future growth [32][33] Question: Consumer health and SNAP program impacts - Management expressed that while consumer sentiment is under pressure, the category remains resilient, with minimal expected impact from SNAP changes [85][87] Question: International market performance - Management acknowledged challenges in the international market but remains optimistic about growth and returning to profitability [59][60]

Financial Data and Key Metrics Changes - The company anticipates a non-algorithmic year for both top and bottom lines in 2026, with a focus on balanced growth across its portfolio [9][10] - Cocoa costs have moderated significantly, although the company still expects year-over-year inflation [9][10] - The long-term revenue growth algorithm is projected at 2%-4%, with EPS showing potential for upside [10][44] Business Line Data and Key Metrics Changes - The everyday CMG business has shown double-digit growth in the last four weeks, indicating strong performance [18][27] - Halloween sales have been disappointing, with a slow start attributed to weather and timing, but the company is analyzing consumer insights for future improvements [26][28] Market Data and Key Metrics Changes - The competitive landscape remains rational, with no significant price gaps causing concern [22][59] - The convenience store channel is performing well, with a 6% growth in CMG, and the company is focused on enhancing its presence in this segment [79][80] Company Strategy and Development Direction - The company is committed to investing in its brands while rebuilding margins over the long term [10][110] - Innovation is a key focus, with successful products like REESE'S OREO driving growth, and a robust pipeline planned for 2026 and beyond [35][36] Management's Comments on Operating Environment and Future Outlook - The management acknowledges the challenging consumer environment but remains optimistic about the category's resilience [88][90] - There is cautious optimism regarding cocoa prices and potential tariff relief, with ongoing monitoring of consumer health and demand [44][90] Other Important Information - The company is experiencing a shift in tax rates due to various factors, including adjustments in reserves and procurement strategies [108][109] - The international segment is currently loss-making but is expected to grow share in core markets despite cocoa challenges [62] Q&A Session Summary Question: Insights on 2026 expectations and EPS growth - Management discussed the balanced growth strategy and the importance of defining success for 2026, emphasizing long-term investments [10][11] Question: Elasticity and pricing expectations - Management indicated that elasticity is a significant factor in planning for next year, with current pricing aligning with expectations [12][13] Question: Halloween sales performance - Management noted that Halloween sales have been soft, with a focus on learning from consumer insights for future seasons [26][28] Question: Competitive pricing environment - Management highlighted the rationality of the U.S. market compared to Europe, with no major price gaps causing concern [22][59] Question: Innovation pipeline for 2026 - Management confirmed a strong innovation pipeline, with successful products driving growth and plans for continued innovation [35][36] Question: Consumer health and SNAP program impacts - Management acknowledged the challenging consumer sentiment but noted minimal expected impact from SNAP changes on the business [88][90] Question: Cocoa cost outlook and pricing strategy - Management expressed cautious optimism about cocoa prices potentially turning deflationary, while maintaining a focus on balanced recovery [54][96]

Financial Data and Key Metrics Changes - The company anticipates a non-algorithm top and bottom line year for 2026, with cocoa costs moderating significantly, although year-over-year inflation is still expected [7][8] - The long-term revenue growth algorithm is projected at 2% to 4%, with potential upside for EPS growth in 2026 [9][40] Business Line Data and Key Metrics Changes - The everyday CMG business has shown double-digit growth over the past four weeks, indicating strong performance in that segment [16][17] - The core business experienced close to 5% growth in Q3, excluding the impact of new innovations like Reese's Oreo [32] Market Data and Key Metrics Changes - The company noted that Halloween sales have been disappointing, with a slow start to the season, but there are opportunities to learn from consumer insights for future seasons [25][27] - The international segment faced challenges, resulting in a loss-making quarter, but the company remains optimistic about growth and share gains in core markets [87][88] Company Strategy and Development Direction - The company is focused on balanced growth across its portfolio while investing in brands and innovation to recover margins over the long term [9][32] - There is a strong emphasis on innovation, with a robust pipeline planned for 2026 and 2027, particularly in the salty snacks category [32][95] Management's Comments on Operating Environment and Future Outlook - Management acknowledges that the consumer market is challenging, but the category remains resilient, with expectations for continued growth despite pressures [117][120] - The company is optimistic about cocoa costs moderating and potential tariff relief, which could positively impact future performance [42][40] Other Important Information - Cocoa prices are still 70% higher than in 2023, and the company is working closely with retailers to manage pricing strategies effectively [29][30] - The company is investing in digital marketing and innovation to drive performance during key seasons like Halloween and the holidays [35][95] Q&A Session Summary Question: Insights on 2026 expectations and EPS growth - Management discussed the balanced growth and the importance of defining success for 2026, focusing on category growth and margin recovery [8][9] Question: Elasticity and pricing expectations - Management indicated that elasticity is a significant factor for planning, with current expectations being cautiously optimistic [11][12] Question: Halloween sales performance - Management acknowledged a slow start to Halloween but emphasized the importance of learning from consumer insights for future improvements [25][27] Question: International market challenges - Management noted that while the international segment is currently loss-making, they are optimistic about future growth and share gains [87][88] Question: Innovation pipeline for 2026 - Management highlighted the importance of innovation, particularly with successful products like Reese's Oreo, and a strong pipeline for future growth [32][95] Question: Consumer health and SNAP program impacts - Management stated that while consumer sentiment is under pressure, the category remains resilient, and the impact of SNAP changes is expected to be minimal [117][120]

Financial Data and Key Metrics Changes - Total Hershey net sales increased by 6.5% year-over-year, with organic constant currency net sales growth of 6.2%, driven by strong innovation and strategic brand investments [8][21] - Adjusted gross margin decreased by 850 basis points year-over-year to 31.8%, impacted by commodity inflation and unfavorable mix, partially offset by higher volume and net price realization [25][29] - Adjusted earnings per share (EPS) is expected to decline between 36% and 37% due to higher supply chain costs and strategic brand investments [20][29] Business Line Data and Key Metrics Changes - North America Confectionery segment net sales increased by 5.6% year-over-year, with a 40 basis point benefit from the Sour Strips acquisition [22] - North America salty snacks segment net sales increased by 10%, with volume growth of approximately 11% driven by brands like Dots and Skinny Pop [23][15] - International segment net sales increased by 12.1%, with strong growth in Brazil and Europe, driven by net price realization and innovation [24][18] Market Data and Key Metrics Changes - Retail takeaway growth in the US candy, mint, and gum category was 5.4%, with nonseasonal business increasing to 6.6% [9] - Consumption growth exceeded category growth in four of the top five franchises, with notable increases in Reese's (7%), Hershey (11%), and Jolly Rancher (nearly 30%) [10] - The Halloween season began slower than anticipated, but the company remains confident in consumer participation rates [12][13] Company Strategy and Development Direction - The company aims to become a multi-category snacking leader, focusing on strong execution and innovation [7][6] - Plans to increase investments in technology for consumer data insights and supply chain agility in 2026 [14][30] - The company is committed to managing cost inflation and driving productivity to enable brand investments [14][32] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the underlying trajectory of the business, raising the net sales outlook to approximately 3% growth [19] - The company is optimistic about cocoa supply fundamentals improving, despite ongoing inflation challenges [30][31] - Management acknowledged the dynamic marketplace and the need for flexibility in investment strategies [32] Other Important Information - The company did not repurchase any shares in the third quarter, with $470 million remaining from the $500 million authorization [28] - Capital expenditures for the third quarter were $86 million, reflecting a decrease from the prior year [27] Q&A Session Summary Question: What are the expectations for the Halloween season? - Management noted that while Halloween performance has been disappointing, they are analyzing trends and adjusting strategies for future seasons [12][13] Question: How is the company addressing commodity inflation? - The company is committed to managing cost inflation through various levers and is focused on productivity to support brand investments [14][30] Question: What is the outlook for international markets? - The company expects low single-digit constant currency growth in Mexico, facing economic challenges but gaining share in chocolate [18]

Core Insights - The Hershey Company reported strong third-quarter results, exceeding expectations due to innovation, strategic brand investments, and effective market execution, leading to an upward revision of its full-year outlook for net sales and earnings per share [2][3]. Financial Performance - Consolidated net sales for Q3 2025 reached $3,181.4 million, marking a 6.5% increase compared to Q3 2024. Organic, constant currency net sales rose by 6.2% [8][10]. - Reported net income was $276.3 million, or $1.36 per diluted share, reflecting a 38.2% decrease year-over-year. Adjusted earnings per share were $1.30, down 44.4% [8][10]. - The company anticipates net sales growth of approximately 3% for the full year 2025, up from a previous estimate of at least 2% [4][5]. Segment Performance - North America Confectionery segment net sales increased by 5.6% to $2,615.6 million, with organic, constant currency net sales up 5.2% driven by net price realization [16][36]. - North America Salty Snacks segment net sales grew by 10.0% to $321.0 million, with volume increasing approximately 11 points [19][21]. - International segment net sales rose by 12.1% to $244.8 million, with a volume increase of approximately 6% [23][36]. Cost and Margin Analysis - Reported gross margin decreased to 32.6% from 41.3% in Q3 2024, while adjusted gross margin fell to 31.8% from 40.3% [11][28]. - Selling, marketing, and administrative expenses increased by 1.5% year-over-year, with advertising expenses down by 5.0% [12][36]. - The reported operating profit was $434.6 million, a decrease of 29.1% compared to the prior year, resulting in an operating profit margin of 13.7% [13][36]. Tax and Corporate Expenses - The effective tax rate for Q3 2025 was reported at 25.7%, an increase of 1,170 basis points from the previous year [14][36]. - Unallocated corporate expenses rose by 38.9% to $193.1 million, primarily due to higher incentive compensation and consulting fees [25][36].

Core Insights - The Hershey Company has appointed Natalie Rothman as Chief Human Resources Officer, effective August 18, 2025, to lead its global HR function [1][3] - Rothman has over 25 years of HR experience and is recognized for her ability to build high-performing teams and modernize HR operations across various industries [2][3] Company Overview - The Hershey Company is a leading snacks company with over 20,000 employees globally, generating more than $11.2 billion in annual revenues from over 90 brand names in approximately 80 countries [5] - The company is committed to ethical and sustainable operations, with a long history of supporting education through initiatives like the Milton Hershey School [6] Leadership Experience - Rothman previously served as CHRO at Inspire Brands, where she implemented business process automation and AI tools to modernize HR operations [3] - At Advance Auto Parts, she led efforts to drive cultural change and enhance organizational capabilities through technology [3][4] Professional Affiliations - Rothman is a member of the New York and New Jersey Bar and the Human Resources Policy Association, and serves on the boards of Udemy and Pearce Services [4]

Core Insights - The Hershey Company is experiencing increased investor interest ahead of its Q1 2025 earnings release, despite a 14% decline in stock price over the past year [1][2][3] - Investors are potentially shifting focus from cost pressures to Hershey's strong brand portfolio and strategic evolution, which may provide defensive positioning and growth potential [2][3] Financial Performance - Hershey's management has guided for a significant drop in Adjusted EPS for fiscal year 2025, projected to decline in the mid-30% range due to rising cocoa prices [5] - Cocoa futures have recently retreated by as much as 30% from record highs, indicating a potential easing of cost pressures [6][7] Business Strategy - Hershey is diversifying its product offerings beyond confectionery, with successful salty snack brands and a pending acquisition of LesserEvil, which aligns with consumer trends towards healthier snacks [9][10] - The company is expected to achieve at least 2% net sales growth in fiscal 2025, reflecting strong brand loyalty and effective pricing strategies [8] Operational Efficiency - Hershey's "Advancing Agility & Automation Initiative" is projected to deliver approximately $125 million in savings during 2025, aiding in cost management and funding for innovation [12] - The company maintains a strong dividend yield of 3.28%, supported by a 15-year track record of annual dividend increases [11][13] Market Positioning - The stock price decline from its 2023 peak may present an entry point for investors seeking quality in a defensive sector [16] - The upcoming Q1 2025 earnings report is crucial, with investors looking for updates on volume performance, margin management, and cocoa cost outlook [15][16] Investment Consideration - Hershey offers a combination of defensive stability and growth potential, making it a compelling option for investors amid easing cost pressures and ongoing strategic initiatives [17][18]

Financial Data and Key Metrics Changes - First quarter net sales reported a decline of 13.8% year-over-year, impacted by a 90 basis point headwind from foreign currency translation and a 15-point volume decline due to inventory lapses and fewer shipping days [23][24][29] - Adjusted earnings per share decreased by 32% in the quarter, with expectations for a less severe decline in the second quarter as seasonal impacts reverse [29] - Adjusted gross margin decreased by 370 basis points, with expectations for further compression in the second quarter due to ongoing commodity inflation [26][27] Business Line Data and Key Metrics Changes - North America Confectionery segment net sales declined by 15%, with volume down nearly 18%, partially offset by net price realization of around 3% [24][25] - The North America salty snacks segment saw a 1% increase in net sales, with volume growth of nearly 4% driven by brands like Dots and Skinny Pop [25][26] - The salty snacks portfolio is positioned for growth, with Skinnypop consumption increasing by 5.4% and Dots retail takeaway growing by 20.6% [14][15] Market Data and Key Metrics Changes - International segment organic constant currency net sales declined by 7.9%, with performance ahead of expectations in key markets like Brazil and Mexico [25][15] - The global cocoa grind declined by 3.4% in Q1, marking the eighth consecutive quarter of declines, indicating ongoing demand challenges [20] Company Strategy and Development Direction - The company is focused on becoming a leading snacking powerhouse, with strategic acquisitions like Lesser Evil and Fulfill to enhance its portfolio [6][7] - Investment in technology and automation is expected to deliver $125 million in cost savings this year, supporting long-term growth [17][28] - The company plans to launch several new products and partnerships, including a collaboration with Pokémon, to drive consumer engagement [12][13] Management's Comments on Operating Environment and Future Outlook - Management noted heightened cost pressures but emphasized a strong balance sheet that allows for continued investment in the business [6] - The company anticipates a strong second quarter with net sales expected to increase by more than 20% as seasonal impacts reverse [24] - Management remains committed to its financial outlook, despite uncertainties related to tariffs and commodity costs [32] Other Important Information - The company did not repurchase any shares in the first quarter, prioritizing capital for acquisitions instead [30][31] - The adjusted tax rate for the quarter was 24.4%, reflecting challenges in executing tax strategies in a changing global landscape [28] Q&A Session Summary Question: What are the expectations for the second quarter? - The company expects total net sales to increase by more than 20% in Q2, reversing the impacts seen in Q1 due to Easter and inventory lapses [24] Question: How is the company addressing cocoa price pressures? - The company is engaging with the US government for tariff exemptions and is preparing strategies to mitigate inflation and protect margins [20][21][32]

Financial Data and Key Metrics Changes - First quarter net sales reported a decline of 13.8% year-over-year, impacted by a 90 basis point headwind from foreign currency translation and a 30 basis point benefit from the Sour Strips acquisition [22][23] - Adjusted earnings per share decreased by 32% in the quarter, with expectations for a less severe decline in the second quarter as seasonal impacts reverse [29] - Adjusted gross margin decreased by 370 basis points, primarily due to commodity inflation and negative sales mix, with expectations for further compression in the second quarter [26][27] Business Line Data and Key Metrics Changes - North America Confectionery segment net sales declined by 15%, in line with expectations, with volume down nearly 18% [23][24] - North America salty snacks segment net sales increased by 1%, with volume growth of nearly 4% driven by brands like Dots and Skinny Pop [24][25] - The salty snacks portfolio showed strong performance, with Skinnypop consumption increasing by 5.4% and Dots retail takeaway growing by 20.6% [14][22] Market Data and Key Metrics Changes - International segment organic constant currency net sales declined by 7.9%, with performance ahead of expectations in key markets [24][15] - Constant currency net sales increased mid-teens in Brazil and mid-single digits in Mexico, driven by improved category dynamics [15] - The global cocoa grind declined by 3.4% in Q1, marking the eighth consecutive quarter of declines [19] Company Strategy and Development Direction - The company is focused on becoming a leading snacking powerhouse, with strategic acquisitions like Lesser Evil and Fulfill to enhance its portfolio [6][7] - Plans to build momentum in everyday business through innovation and programming, including new product launches and partnerships [12][13] - Continued investment in brands is expected to drive long-term growth, with a full-year advertising spend increase projected in the mid-single digits [16] Management Comments on Operating Environment and Future Outlook - Management noted heightened cost pressures but emphasized a strong balance sheet that allows for continued investment [6] - The company anticipates total net sales to increase by more than 20% in Q2, reversing the impacts seen in Q1 [22] - Cocoa prices are expected to build cost pressure each quarter, with robust planning underway to mitigate inflation and protect margins [19][20] Other Important Information - The company is pursuing an exemption request for cocoa tariffs, which cannot be mitigated through sourcing strategies [20][31] - Capital expenditures in Q1 were $146 million, lower than the prior year, with full-year expectations of $425 million to $450 million [30] - The company did not repurchase any shares in Q1, prioritizing capital for announced acquisitions [31] Q&A Session Summary Question: What are the expectations for net sales growth in the upcoming quarters? - The company expects total net sales to increase by more than 20% in Q2, reversing the impacts from Q1 [22] Question: How is the company addressing cocoa price pressures? - The company is implementing robust planning to mitigate inflation and protect margins, with a focus on pricing and sourcing strategies [19][20] Question: What is the outlook for advertising spend this year? - The company anticipates a mid-single digit increase in full-year advertising spend, reflecting a commitment to brand investment [16]