Hershey chief Dave West has said the company will look to focus on its “core” products and hinted it would wait before launching more products due to the uncertain economic climate.
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The US chocolate giant today (23 April) booked higher first-quarter earnings as advertising campaigns and Easter sales helped boost the company’s chocolate brands.
The group booked underlying net income – which stripped out charges linked to the firm’s restructuring programme – just under US$86m for the three months to 5 April, against $83.9m a year earlier.
Sales climbed from $1.16bn a year ago to $1.24bn during the current fiscal first quarter.
West said the results represented “a good start to 2009”. West said: “Performance was solid with gains in net sales, profitability and US market share.”
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By GlobalDataRecent price increases had helped drive the rise in revenues at Hershey as consumers still bought the company’s products despite the price hikes.
However, West said Hershey’s management remains “cautious” about consumer behaviour, particularly with prices still set to rise on a number of the company’s lines.
“There is a large part of our business that has yet to see the increases in prices and consumers have yet to have the chance to react to that,” West told analysts in a conference call. “We’re cautious about the consumer and the consumer reaction.”
Chocolate remains one of the more resilient categories amid the downturn and Hershey’s portfolio of mainstream brands has helped the business gain share.
West said US retailers ware continuing to devote more shelf space to “everyday” lines at the expense of “premium “ and “trade-up” products.
The Hershey president and CEO said the company remained committed to its upmarket Bliss line. However, he hinted that the launch of any new products would come in the last quarter of 2009 and in early 2010 and would focus on more mainstream categories.
“There are a few things coming, more towards the fourth quarter,” West said. “The market is changing. This is certainly a time when a focus on core is a good thing.”
