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Hershey Q1 Earnings Top Estimates, Sales Down Amid Volume Pressure
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The Hershey Company (HSY - Free Report) reported first-quarter 2025 results, with the top line missing the Zacks Consensus Estimate but the bottom line exceeding the same. However, both metrics declined year over year.
Hershey posted adjusted earnings of $2.09 per share, which fell 31.9% year over year but beat the Zacks Consensus Estimate of $1.94. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)
Hershey Company (The) Price, Consensus and EPS Surprise
Consolidated net sales of $2,805.4 million decreased 13.8% from the year-ago quarter’s tally, missing the Zacks Consensus Estimate of $2,821 million. On a constant-currency (cc) basis, organic sales decreased 13.2%.
Volume was down approximately 15 points, primarily due to the lapping of planned inventory builds in the North America Confectionery and International segments ahead of the ERP implementation in the second quarter of 2024, the shift in the Easter holiday timing between 2025 and 2024, and two fewer shipping days year over year. These volume pressures were only partially offset by price realization of approximately 2 points. The Sour Strips acquisition contributed a modest 0.3 point benefit, while foreign currency exchange posed a 0.9 point headwind.
Taking a Closer Look at HSY’s Results
Hershey’s adjusted gross margin was 41.2%, which contracted 370 basis points (bps), primarily due to higher commodity and manufacturing costs, an unfavorable product mix and lower volumes. These pressures offset the benefits from net price realization, supply-chain productivity gains and savings from the company’s transformation program.
Selling, marketing and administrative (SM&A) expenses fell 9.6% year over year, caused by reductions in advertising and consumer marketing spend, lower compensation and benefits, fewer capability and technology investments, and transformation program net savings. Advertising and related consumer marketing expenses decreased 14.2% year over year. Excluding advertising and consumer marketing expenses, SM&A expenses dropped 7%.
Adjusted operating profit dipped 29.4% year over year to $608.1 million, with the operating margin contracting 480 bps to 21.7%. The decline was mainly due to elevated commodity and manufacturing costs, partially offset by price realization, transformation program savings, supply-chain efficiencies and lower SM&A expenses.
HSY Provides Insights by Segment
Hershey's North America Confectionery segment reported net sales of $2,300.1 million, marking a 15% decrease. Organic, cc net sales fell 15.2%, due to volume headwinds of approximately 18 points. These were due to the lapping of planned inventory builds ahead of the ERP implementation in the second quarter of 2024, the timing shift of the Easter season between 2024 and 2025, and two fewer shipping days compared with the prior year. This volume impact was only partially offset by the price realization of approximately 3 points.
For the 12 weeks ending March 23, 2025, Hershey’s U.S. candy, mint and gum (“CMG”) retail takeaway in the multi-outlet plus convenience store channels decreased 4.2%, reflecting the later Easter in 2025. The company’s CMG market share contracted 44 bps. Hershey's North America Confectionery segment income was $696.4 million, marking a 26.6% decrease. As a result, the segment margin for the quarter was 30.3%, a decrease of 470 bps.
The North America Salty Snacks segment’s net sales of $277.8 million rose 1%. Volume increased nearly 4 points, which was partially offset by an approximate 3-point decline in net pricing, primarily due to costs associated with the rollout of new SkinnyPop packaging.
Hershey’s U.S. salty snack retail takeaway in the multi-outlet plus convenience store channels increased 9.6% for the 12 weeks ending March 30, 2025. The North America Salty Snacks segment income was $41.9 million, an increase of 8.1%. The segment margin improved to 15.1%, an increase of 100 bps year over year.
Hershey's International segment posted net sales of $227.5 million, reflecting a 15.9% decline. Organic, cc net sales decreased 7.9%. The International segment income was $28.7 million, down 32.9% year over year. As a result, the segment's profit margin contracted 320 bps to 12.6%.
HSY’s Financial Health Snapshot
HSY ended the quarter with cash and cash equivalents of $1,515.3 million, long-term debt of $5,177.3 million and a total shareholders’ equity of $4,684.9 million. Management expects capital expenditure in the range of $425 million to $450 million for 2025.
What to Expect From HSY in 2025?
Management expects net sales to increase at least 2% in 2025.
The company expects adjusted EPS between $6.00 and $6.18, reflecting a mid-30% decline from 2024, while reported EPS is projected between $5.55 and $5.87, down in the high-40% range.
Management now expects a reported and adjusted effective tax rate of approximately 16%, reflecting the evolving global business and tax environment. Tariff expense, based on current understanding, is anticipated to be approximately $15 million to $20 million in the second quarter. Moreover, interest expense is now projected to be between $185 million and $190 million, slightly lower than the earlier estimate of $190 million to $195 million.
This Zacks Rank #3 (Hold) stock has gained 13.1% in the past three months compared with the industry’s growth of 9.8%.
The consensus estimate for United Natural’s current fiscal-year sales and earnings implies growth of 1.9% and 485.7%, respectively, from the year-ago figures. UNFI delivered a trailing four-quarter earnings surprise of 408.7%, on average.
Utz Brands (UTZ - Free Report) engages in the manufacture, marketing and distribution of snack foods in the United States and presently carries a Zacks Rank of 2. UTZ delivered a trailing four-quarter earnings surprise of 8.8%, on average.
The Zacks Consensus Estimate for Utz Brands’ current financial-year sales and earnings indicates growth of 1.4% and 10.4%, respectively, from the year-ago numbers.
Mondelez International, Inc. (MDLZ - Free Report) manufactures, markets and sells snack food and beverage products in Latin America, North America, Asia, the Middle East, Africa, and Europe. It presently carries a Zacks Rank of 2. MDLZ delivered a trailing four-quarter earnings surprise of 9.8%, on average.
The Zacks Consensus Estimate for Mondelez International’s current financial-year sales indicates growth of 3.7% from the year-ago numbers.
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Hershey Q1 Earnings Top Estimates, Sales Down Amid Volume Pressure
The Hershey Company (HSY - Free Report) reported first-quarter 2025 results, with the top line missing the Zacks Consensus Estimate but the bottom line exceeding the same. However, both metrics declined year over year.
Hershey posted adjusted earnings of $2.09 per share, which fell 31.9% year over year but beat the Zacks Consensus Estimate of $1.94. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)
Hershey Company (The) Price, Consensus and EPS Surprise
Hershey Company (The) price-consensus-eps-surprise-chart | Hershey Company (The) Quote
Consolidated net sales of $2,805.4 million decreased 13.8% from the year-ago quarter’s tally, missing the Zacks Consensus Estimate of $2,821 million. On a constant-currency (cc) basis, organic sales decreased 13.2%.
Volume was down approximately 15 points, primarily due to the lapping of planned inventory builds in the North America Confectionery and International segments ahead of the ERP implementation in the second quarter of 2024, the shift in the Easter holiday timing between 2025 and 2024, and two fewer shipping days year over year. These volume pressures were only partially offset by price realization of approximately 2 points. The Sour Strips acquisition contributed a modest 0.3 point benefit, while foreign currency exchange posed a 0.9 point headwind.
Taking a Closer Look at HSY’s Results
Hershey’s adjusted gross margin was 41.2%, which contracted 370 basis points (bps), primarily due to higher commodity and manufacturing costs, an unfavorable product mix and lower volumes. These pressures offset the benefits from net price realization, supply-chain productivity gains and savings from the company’s transformation program.
Selling, marketing and administrative (SM&A) expenses fell 9.6% year over year, caused by reductions in advertising and consumer marketing spend, lower compensation and benefits, fewer capability and technology investments, and transformation program net savings. Advertising and related consumer marketing expenses decreased 14.2% year over year. Excluding advertising and consumer marketing expenses, SM&A expenses dropped 7%.
Adjusted operating profit dipped 29.4% year over year to $608.1 million, with the operating margin contracting 480 bps to 21.7%. The decline was mainly due to elevated commodity and manufacturing costs, partially offset by price realization, transformation program savings, supply-chain efficiencies and lower SM&A expenses.
HSY Provides Insights by Segment
Hershey's North America Confectionery segment reported net sales of $2,300.1 million, marking a 15% decrease. Organic, cc net sales fell 15.2%, due to volume headwinds of approximately 18 points. These were due to the lapping of planned inventory builds ahead of the ERP implementation in the second quarter of 2024, the timing shift of the Easter season between 2024 and 2025, and two fewer shipping days compared with the prior year. This volume impact was only partially offset by the price realization of approximately 3 points.
For the 12 weeks ending March 23, 2025, Hershey’s U.S. candy, mint and gum (“CMG”) retail takeaway in the multi-outlet plus convenience store channels decreased 4.2%, reflecting the later Easter in 2025. The company’s CMG market share contracted 44 bps. Hershey's North America Confectionery segment income was $696.4 million, marking a 26.6% decrease. As a result, the segment margin for the quarter was 30.3%, a decrease of 470 bps.
The North America Salty Snacks segment’s net sales of $277.8 million rose 1%. Volume increased nearly 4 points, which was partially offset by an approximate 3-point decline in net pricing, primarily due to costs associated with the rollout of new SkinnyPop packaging.
Hershey’s U.S. salty snack retail takeaway in the multi-outlet plus convenience store channels increased 9.6% for the 12 weeks ending March 30, 2025. The North America Salty Snacks segment income was $41.9 million, an increase of 8.1%. The segment margin improved to 15.1%, an increase of 100 bps year over year.
Hershey's International segment posted net sales of $227.5 million, reflecting a 15.9% decline. Organic, cc net sales decreased 7.9%. The International segment income was $28.7 million, down 32.9% year over year. As a result, the segment's profit margin contracted 320 bps to 12.6%.
HSY’s Financial Health Snapshot
HSY ended the quarter with cash and cash equivalents of $1,515.3 million, long-term debt of $5,177.3 million and a total shareholders’ equity of $4,684.9 million. Management expects capital expenditure in the range of $425 million to $450 million for 2025.
What to Expect From HSY in 2025?
Management expects net sales to increase at least 2% in 2025.
The company expects adjusted EPS between $6.00 and $6.18, reflecting a mid-30% decline from 2024, while reported EPS is projected between $5.55 and $5.87, down in the high-40% range.
Management now expects a reported and adjusted effective tax rate of approximately 16%, reflecting the evolving global business and tax environment. Tariff expense, based on current understanding, is anticipated to be approximately $15 million to $20 million in the second quarter. Moreover, interest expense is now projected to be between $185 million and $190 million, slightly lower than the earlier estimate of $190 million to $195 million.
This Zacks Rank #3 (Hold) stock has gained 13.1% in the past three months compared with the industry’s growth of 9.8%.
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Three Food Stocks to Consider
United Natural Foods, Inc. (UNFI - Free Report) distributes natural, organic, specialty, produce and conventional grocery and non-food products in the United States and Canada. At present, United Natural carries a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The consensus estimate for United Natural’s current fiscal-year sales and earnings implies growth of 1.9% and 485.7%, respectively, from the year-ago figures. UNFI delivered a trailing four-quarter earnings surprise of 408.7%, on average.
Utz Brands (UTZ - Free Report) engages in the manufacture, marketing and distribution of snack foods in the United States and presently carries a Zacks Rank of 2. UTZ delivered a trailing four-quarter earnings surprise of 8.8%, on average.
The Zacks Consensus Estimate for Utz Brands’ current financial-year sales and earnings indicates growth of 1.4% and 10.4%, respectively, from the year-ago numbers.
Mondelez International, Inc. (MDLZ - Free Report) manufactures, markets and sells snack food and beverage products in Latin America, North America, Asia, the Middle East, Africa, and Europe. It presently carries a Zacks Rank of 2. MDLZ delivered a trailing four-quarter earnings surprise of 9.8%, on average.
The Zacks Consensus Estimate for Mondelez International’s current financial-year sales indicates growth of 3.7% from the year-ago numbers.