Hershey tops quarterly estimates boosted by higher candy prices
Candy stock down almost 17% last quarter
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Hershey beat Wall Street expectations for quarterly sales and profit on Thursday, riding on benefits from higher prices of its chocolates and candies at a time when demand has slowed.
Shares of the 129-year-old company slipped and have fallen over 17% this year.
Hershey
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When supply chain disruptions and the Russia-Ukraine war pushed up prices of everything from transport to commodities like sugar, many packaged food companies including Hershey raised the prices of their products to offset the impact of these costs.
Chocolate bars are displayed for sale at the Hershey Co. Chocolate World store in Hershey, Pennsylvania, U.S., on Friday, July 13, 2018. Hershey Co. is scheduled to release earnings figures on July 26. Photographer: Angus Mordant/Bloomberg via Getty (Getty Images / Getty Images)
But several rounds of price hikes in the last two years have now hit demand and customers have started to push back on pricier consumables like chocolates and candies as they struggle with higher interest rates and grocery prices.
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Overall organic prices rose by 9.8% in the third quarter, while organic volumes increased by only 0.9%.
Hershey still expects to see a sales boost from major holidays like Halloween when customers stock up on Reese's peanut butter cups and milk duds for trick-or-treat events.
A shopper pushes a cart filled with candy at Hershey's Chocolate World in Hershey, Pennsylvania, U.S., on Thursday, Nov. 11, 2021. Hershey Co. says it has entered into definitive agreements to buy Dots Pretzels and Pretzels Inc.for about $1.2b in tot (Getty Images / Getty Images)
CEO Michele Buck said consumers were buying Halloween candy closer to the holiday this year, unlike last year when inventory unavailability spurred earlier purchases.
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Hershey's net sales rose to $3.03 billion in the quarter ended Oct. 1 from $2.73 billion a year earlier. Analysts on average had expected $2.95 billion, according to LSEG data.
Excluding one-off items, it earned $2.60 per share, topping estimates of $2.45 per share.
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The company also reaffirmed its annual profit forecast of $9.46 to $9.54 per share and sales expectations for an 8% rise.