Hershey has lowered its forecasts for its net sales and earnings per share in 2024 amid what CEO Michele Buck called “a challenging consumer environment”.
The US snacks giant is now expecting flat net sales this year, down from its previous guidance of growth of around 2%.
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Hershey also downgraded two forecasts for earnings per share, both on a reported and an adjusted basis.
The Reese’s maker is now predicting a 6-9% decline in reported EPS, versus an earlier forecast of a 1-3% fall.
The company sees its adjusted EPS being lower at a “mid-single-digit” rate. Hershey’s previous forecast on this metric was for adjusted EPS to be “down slightly” in 2024.
“We believe in the resiliency of our snacking categories and the strength of our brands,” Buck, Hershey’s president and CEO, said. “While year-to-date results have been affected by historically high cocoa prices and a challenging consumer environment, we are laser-focused on controlling what we can and are acting with immediacy to deliver value to customers, consumers and shareholders.”
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By GlobalDataIn the third quarter ending 29 September, Hershey reported net sales of $2.99bn, a marginal decrease from $3.03bn in the corresponding period of 2023.
The company’s gross margin fell to 41.3%, down from 44.9% in the previous year. Hershey pointed to factors including rising input costs and “an unfavourable mix”.
Operating profit for the quarter declined 16.6% to $613.2m
Net income dropped 13.9% to $446.3m.
Over the first nine months of 2024, net sales amounted to $8.31bn, down from $8.51bn in 2023, Net income reached $1.42bn, a decrease from $1.51bn in the prior year.
Buck added: “Our priorities are to drive top-line and market share growth by winning in-store with key customers, expanding our chocolate portfolio, accelerating sweets and maximising our seasonal strength.”
Shares in Hershey were down 2.26% at $172.82 at 12:57 GMT.
“This was a disappointing quarter that continues to underline the ongoing
challenges facing all parts of the business,” Bernstein analyst Alexia Howard wrote in a note to clients. “It seems that over and above the obvious cocoa pressures on margins, category growth remains lacklustre even against particularly easy
comparables from a year ago.”
