Hershey's beats on earnings as Reese's Caramel, Dot's Pretzels boost sales

By Tomi Kilgore

Confectionery sales jump more than 10%, and salty snacks sales swing to growth

Shares of Hershey Co. seesawed to a gain Friday, after the chocolate and salty snacks company reported first-quarter profit and sales that rose above expectations, amid strength in its North America confectionery business, and kept its full-year growth outlook intact.

Sales got a boost from a return to volume growth, while prices rose at the lowest rate in nearly three years.

The stock (HSY) climbed 1.3% in midday trading, erasing an earlier intraday loss of as much as 2.2%.

Net income rose to $797.5 million, or $3.89 a share, from $587.2 million, or $2.85 a share, in the same period a year ago.

Excluding nonrecurring items, such as losses on derivatives, adjusted earnings per share of $3.07 beat the FactSet consensus of $2.76. That marked the 16th straight quarter Hershey beat bottom-line expectations.

Sales grew 8.9% to $3.25 billion, above the FactSet consensus of $3.11 billion.

Volume increased 3.4%, after falling 6.6% in the fourth quarter, due primarily to an increase in "everyday core U.S. confection."

Prices rose 5.2%, down from a recent peak of a 9.8% increase in the third quarter of 2023, and the lowest rise since the 3.1% increase in the third quarter of 2021.

In North America, confectionery sales rose 10.4%, after rising just 2.1% in the fourth quarter. Growth was helped by seasonal sales, including a 6.5% rise for the "Valentine's" category, and Reese's Caramel launched in late-2023.

Sales of salty snacks increased 1.9%, after tumbling 24.6% in the previous quarter. Growth was driven by continued strength in Dot's Pretzels, which was partially offset by expected declines in SkinnyPop, amid broader category weakness.

"While the category remains challenged, both sales and share trends improved in the first quarter compared to thesecond half of last year behind media and merchandising increases," said Chief Financial Officer Steve Voskuil.

International sales were up 1.8%, down from 12.7% growth in the fourth quarter.

"We are off to a strong start and remain on track to deliver our business strategies and financial commitments for the year," said Chief Executive Michele Buck.

For 2024, the company maintained its guidance ranges for adjusted EPS growth of about flat and for sales growth of 2% to 3%.

The stock has gained 6.4% year to date, while the S&P 500 index has advanced 7.3%.

-Tomi Kilgore

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05-03-24 1153ET

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